Reporting Frameworks
Multiple frameworks, standards and certification
The sheer number of frameworks, standards and certification can make environmental and ESG disclosure seem overwhelming. The best way for companies to navigate this landscape is to figure out what would yield the most meaningful and useful disclosure for the company and its key stakeholders. This analysis requires understanding the material issues as determined by their stakeholders.
- The nuances between different disclosure frameworks/standards
- Which frameworks/ standards best enable your company to tell its story to its different stakeholders
- Which rankings and ratings matter to the people that matter to your company
With multiple forms of reporting and numerous certifications and standards, it can be confusing to know which to participate in. There is no right answer, as there is a different purpose for each.
The first distinction to be made is between ISO standards and certifications, RIOS Certification and ESG reporting.
Certifications
Many ReMA members have ISO or RIOS certifications. These certifications require many of the same disclosures that ESG standards request. While the certifications are valuable for the recycling industry, there are differences between them and ESG standards. Importantly, ESG disclosures are expected to be reported publicly. They do not offer “certification” of any type, rather they provide information for stakeholders to use to evaluate organizations.
The following are relevant global standards and certification that are currently used in the recycling and manufacturing industry.
| Standard/Certification | Description / Purpose |
| ISO 9001 | ISO 9001 is the process by which top management reviews the effectiveness of the system and analyzes the performance of the organization. It helps organizations of all sizes demonstrate the ability to consistently provide products and services that meet customer and regulatory requirements, while also enhancing customers satisfaction through the effective application of the system, including process improvement and the assurance of conformity to customers and applicable statutory and regulatory requirements |
| ISO 14001 | An internationally accredited framework for implementing sustainable business practices that protect the environment. They are designed to help organizations operate with sustainability, to adhere to environmental regulations, and to continuously improve their processes.
ISO 14000 specifies the requirements for an effective Environmental Management System (EMS). Certification requires many of the same activities that are included in ESG reporting but is limited to an environmental management focus. ISO 14000 is important because it enables organizations to move beyond regulatory compliance and take a proactive approach toward environmental management. A related standard and certification is the ISO 50001 Energy Management System. |
| RIOS | The RIOS standard was written and developed by industry leaders and experts and was built on the well-refined concepts of plan-do-check-act. The requirements contained with RIOS™ are not prescriptive; rather. they provide the blueprint for evaluating, understanding, and eliminating quality, environmental, and health and safety risk within your operation, including:
|
ESG Frameworks and Standards
Many companies choose to align their sustainability reporting with one or more ESG frameworks or standards systems. Frameworks offer principles and guidance for “how” a report is structured. Standards provide specific, replicable and detailed requirements for “what” should be reported for each relevant topic.
The Global Reporting Initiative (GRI), SASB (now IFRS), TCFD (now part of SASB and IFRS), and CDP (formerly the ‘Carbon Disclosure Project’) all offer different standards, yet have evolved over the years to be aligned – working together as reporting continues to change. While GRI tends to be the broadest of the standards, SASB focuses on industry specific reporting and is investor focused, TCFD is very focused on the financial impacts of ESG reporting, and CDP is focused on climate, forest, and water impacts.
ReMA has chosen to use the Global Reporting Initiative (GRI) for its recommended framework and standards. GRI provides a broad framework, as well as standards for reporting, and is the most used reference for ESG reporting throughout the globe. GRI that has continue to align and evolve through the ESG reporting consolidation process. GRI, SASB and TCFD are now all working together with cross references where disclosures are aligned.
Aligning your disclosures with one or more frameworks or standards should be a deliberate decision – and based on your materiality assessment as well as stakeholder feedback. Some stakeholder groups have publicly endorsed specific reporting standards – make sure you’re aware of these in your decision-making process.
How to Use the GRI Standards
GRI Consolidated Standards are made up of three main sections that, combined, make up the GRI Reporting System. They are structured as a system of interrelated standards that are organized into three series:
The Universal Standards include GRI 1, GRI 2, and GRI 3.
- GRI 1: Foundation 2021. This is the overview section that explains how to use the GRI Standards. It introduces the purpose and system of the GRI Sustainability Reporting Standards (GRI Standards) and explains key concepts for sustainability reporting. It also specifies the requirements and reporting principles that organizations must comply with to report in accordance with the GRI Standards.
- GRI 2: General Disclosures. Contains disclosures that the organization uses to provide information about its reporting practices and other organizational details, such as its activities, governance, and policies.
- GRI 3: Material Topics. Provides guidance on how to determine material topics. It also contains disclosures that the organization uses to report information about its process of determining material topics, its list of material topics, and how it manages each topic. Subsections within GRI address specific issues relevant to material topics.
Sector Standards
The Sector Standards provide information for organizations about their likely material topics. The organization uses the Sector Standards that apply to its sectors when determining its material topics and when determining what to report for each material topic. GRI has not developed Sector Standards for our industry.
Topic Standards
The Topic Standards contain disclosures that the organization uses to report information about its impacts in relation to particular topics. The organization uses the Topic Standards according to the list of material topics it has determined using GRI 3. This includes a company’s materiality review to identify material topics.
For ReMA members, disclosure of material topics includes environmental and social impacts, so we have included spreadsheets (Environmental, Social, and Governance) from GRI material impacts for these topics. Only complete the sections relevant to your company’s material topics.
Want to learn more about ESG reporting? GRI has offered ReMA members a 25% discount on all its GRI Academy courses using the code ISRI_25_sIK1lRib.
Standards and Frameworks to Know
The list below is an overview of some of the most widely-used or -referenced reporting frameworks as well as some more recent standards. It is not comprehensive nor should it be read as recommending one set of standards over another – and note that each standard references the stakeholder groups it is designed to be relevant to.
| Framework or Standard | Description / Purpose |
| Global Reporting Initiative (GRI) | The GRI Standards provide a framework and set of supporting standards covering a wide range of sustainability topics. The GRI Standards consist of the so-called Universal Standards, Sector standards (only applicable for Oil and Gas, Coal, and Agriculture) and 34 topic-specific standards. The Universal Standards cover disclosures about the organization’s specific context, such as its governance, management systems, reporting practices, products, services, stakeholder engagement and management approach. Each of the Topic Standards specifies a combination of qualitative and quantitative information to be disclosed.
Companies are not required to report on all topics covered by the GRI Standards. Rather, companies using the GRI Standards are expected to identify and prioritize the topics that reflect their most significant economic, environmental and social impacts or that would substantively influence the assessments and decisions of stakeholders. Companies can either report using the GRI Standards as a complete system or use them to report on selected topics. GRI Standards are multi-stakeholder in focus and can be relevant for a range of users anywhere from investors to governments to civil society. |
| In July of 2023, SASB and TCFD merged under the IFRS Foundation, and continue to collaborate with GRI to ensure that the best aspects of each standard are covered.
• IFRS incorporated TCFD’s four thematic areas of financial focus: Governance; Strategy, Risk (and Opportunity Management) and Metrics • IFRS uses SASB’s industry-specific standards and Targets. The change will facilitate reporting for many companies. IFRS has now issued IFRS 1 and IFRS 2, disclosure standards on sustainability-related financial information and climate-related disclosures. They are described separately below since you will continue to see references to these two standards for some time. |
|
| Sustainability Accounting Standards Board (SASB) | The SASB Standards focused on the subset of sustainability-related risks and opportunities most likely to affect a company’s financial condition (e.g. its balance sheet), operating performance (e.g. its income statement) or risk profile (e.g. its market valuation and cost of capital).
Given SASB’s stated focus on financial materiality as defined by the U.S. Supreme Court and the SEC, investors are the primary audience for SASB reporting. |
| Task Force on Climate-Related Financial Disclosures (TCFD) | The TCFD Recommendations provided a framework for climate-related financial disclosures, with the objective of enabling users to understand how reporting organizations assess climate-related risks and opportunities. The framework is structured around four thematic areas: governance, strategy, risk management, and metrics and targets, with high-level recommended disclosures under each of these. The TCFD encourages reporting companies to undertake and report on the results of climate scenario analysis as part of their strategy and risk management processes. While the TCFD offers guidance around the type of information that should be disclosed, it is principles-based, and does not prescribe the specific metrics that should be used for such disclosure. Standard setters such as GRI, SASB and others have done work around mapping their standards to the TCFD.
Given the focus on ”decision-useful, climate-related information,” investors, lenders, and insurance underwriters are the primary audience for TCFD reporting; to date, several national governments have relied on them for regulatory requirements as well. |
| CDP was formerly called The Carbon Disclosure Project. It was initially developed in response to increasing demand for standardized reporting of greenhouse gas (GHG) emission data. It is different from other disclosures in that it is completed by not only companies, but by cities, states and regions to report and manage their environmental impacts. Companies and cities are provided with a score based on their disclosures. It tends to set the standard for new topics to be included. It recently expanded from climate into deforestation and water security. |
| SBTi | The Science Based Targets initiative (SBTi) provides guidance and standards on ambitious and rigorous climate action targets that are in line with the latest climate science. The goal of the initiative is to accelerate companies to support the global economy to halve emissions before 2030 and achieve net-zero before 2050. Through its validation services arm, SBTi assesses and validates companies’ and financial institutions’ targets. |
| UN SDGs | The UN Sustainable Development Goals are a universal call to action to end poverty, protect the planet and improve the lives and prospects of everyone, everywhere. The 17 Goals were adopted by all UN Member States in 2015, as part of the 2030 Agenda for Sustainable Development. Although the goals were developed primarily for nation states, some companies use the goals as a framework, identify specific SDG’s that are material to their operations, and link their activities to these goals. Increasingly, investors have asked for a more focused, rather than broad set of goals to allow for a concerted focus on making meaningful progress.
For a full review of the SDG’s, refer to the UN Sustainable Development Goals website. When reviewing, it is important to review the specific targets for each goal to understand the context for each one. |
SEC Climate Disclosure Rule
In March 2024, the SEC approved rules that require public companies to disclose certain climate-related risks, goals and strategies, and for large public companies to disclose their Scope 1 and Scope 2 emissions. The disclosure rules will be phased in, starting in 2025. While the rule is facing legal challenges by some states, public companies should begin preparing for compliance. SEC’s Fact Sheet provides additional details, and ReMA consultant Holland & Knight prepared a helpful summary. and walked through the ruling and the state of current legal challenges in our June 2024 webinar:
CSRD – Reporting Requirement in the European Union
In additional to the reporting disclosures being developed by the non-regulatory authorities above, the EU is bringing sustainability reporting in line with financial reporting, with the introduction of the Corporate Sustainability Reporting Directive (CSRD). The new framework will be rolled out in a phased approach from 2024. It will require companies to report on how sustainability issues, such as climate change, impact their business and how their operations in turn affect people and planet – a principle called ‘double materiality’.
Who needs to comply?
Almost 50,000 companies are expected to be impacted by CSRD, making up some three quarters of business in the European Economic Area. CSRD will apply to all:
- Companies listed on regulated markets in the EU (apart from listed micro-enterprises), and large companies. The CSRD classifies a large company as one that meets two out of three of the following criteria: more than 250 employees, a turnover of over €40 million and over €20m total assets. These companies will also have to take into account information at subsidiary level.
- Listed SMEs, although there will be a transitional period when SMEs can opt out until 2028. However, there are big benefits for SMEs to comply with the reporting.
- Non-EU companies with a net turnover of €150 million in the EU, and with at least one subsidiary or branch in the union.
ESG Research and Ratings
Finally, multiple investor groups and bankers in the financial industry, as well as some large customer groups rely on the numerous ESG research and rating groups that exist in the market. These third-party research firms collect ESG information on companies for the purposes of scoring ESG performance. This information is used by investors to inform their investment decision-making, though many investors also conduct their own analysis.
Some research firms collect information directly from companies, using surveys or questionnaires. Others rely on publicly available information (though may still ask the company to verify the collected information) while still others use some combination of public information and questionnaires. Different firms use different methodologies (though there is some overlap among them), which makes it challenging from a resource and cost perspective to address all of these. It can be challenging for companies to decide which ESG data providers/rankers/raters are most relevant for them and their key stakeholders and allocate their efforts accordingly.
The list below is a current, non-exhaustive, compilation of firms that collect information from companies for evaluation and analysis and use by investors, regulators, customers or other stakeholders.
- MSCI
- Sustainalytics
- Ecovadis
- Gartner
- Ernst & Young OCEAN™ rating system
- Bloomberg ESG Data Service
- Corporate Knights Global 100
- DowJones Sustainability Index (DJSI)
- Institutional Shareholder Services (ISS)
- RepRisk
- Thomson Reuters ESG Research Data
- FTSE Russell’s ESG Ratings
- S&P Global ESG Scores
Reporting to Customers
There are very few rules about reporting, especially for privately-owned companies or companies with less than $1 B of revenue (see California’s new requirements; here’s a summary from EY). However, recyclers provide services to companies that either must report to other entities, or create their own reports for the customers. In other words, if you want to continue to do business with these companies, you should expect to provide them a report each year.
A couple of suggestions to make this easier:
- Many of your larger customers likely ask the same, or similar questions each year. You might consider creating a template of these questions to populate each year to send to key customers. While you are likely to see surveys evolve and change over time, this will make any extra work more manageable. Customers in different sectors may ask different types of questions, so you may want to factor that into any template work that you develop, see patterns by customer type. For really large companies, a certain degree of specific effort is to be expected.
- Another approach is to use GRI indices (with the help of this toolkit’s data gathering templates) to create your own template since many of your customers are probably using this, or a similar template. Again, this may not eliminate some evolving or custom work, but it will make your data gathering efforts much easier.
- If you do create a template that provides all of the information but in your own format, you might ask your customer if you can provide it instead of completing their questionnaire. Increasingly, larger companies are posting data directly on their websites to facilitate this process where possible.
Data gathering is here to stay. It is probably better to get on board early to create a basic template and system that works for your company and your customers, and that can evolve over time.
For more information, please refer to the November 2023 workshop on reporting standards (download slide deck)- note the workshop was recorded before the SEC’s March 2024 ruling on climate disclosure: