Guide to ESG reporting

ESG reporting can seem like a daunting task, but it doesn’t have to. Learn the basics in this article.

Nov 23, 2020
June 12, 2023

ESG reporting is the act of disclosing company performance related to environmental, social, and (corporate) governance issues. Demand for such reporting has grown over the last decade as investors increasingly value stakeholder treatment by corporations and look to non-financial information to obtain above average stock returns. Although the act of ESG reporting involves the disclosure of sensitive, and even embarrassing, private information, many companies choose to voluntarily disclose ESG metrics. In fact, those companies that have embraced ESG reporting enjoy many material benefits.1 This article offers best practices for approaching ESG reporting and helps readers identify the best reporting frameworks to use.

Optimizing Your Approach to ESG Reporting

ESG reporting can open doors to many material benefits for your company, but not all ESG reports are created equal. Here are some best practices for developing your approach to ESG reporting.

1. Focus on Key Stakeholders

Managing stakeholder relationships can be tricky. This could be because there are many of them or because their desires do not perfectly align with those of the shareholders. First identify which stakeholders are most important to your business, then craft your company’s ESG report with these key stakeholders in mind. Different companies will have different key stakeholders, though groups such as shareholders, customers, and employees are generally included in that conversation.

2. Focus on Material Issues

Although there are numerous issues that fall under the ESG umbrella, only a select few are relevant to your business. The industry your company belongs to plays a large factor in determining which ESG issues are material. For example, a social media firm will usually focus on issues such as how it protects its customers’ data privacy while an oil and gas company will tend to focus on topics related to its own environmental sustainability. As companies focus on material issues, the information they disclose stays relevant to stakeholders.

3. Tell Your Company Story

Professor Jeff Hales of the University of Texas at Austin is Chair of the Sustainability Accounting Standards Board (SASB). During an IPOhub interview in August 2020, Hales stated that an ESG report is more than just another company disclosure. “It’s your [company’s] message, so get it out there.” As a jumping off point, Hales suggested businesses consider what kind of reputation they want their company to have and to let that idea guide their authentic ESG story.

4. Be Responsive

Professor Hales also touched on the importance of being responsive to stakeholders. Questions and concerns about your company’s environmental, social, and governance performance will inevitably come up over time. Responding quickly to stakeholder concerns keeps your company in control of its narrative. After all, as the familiar adage goes, “if you don’t tell your story, someone else will.”

5. Standardize by Reporting Against a Common Framework

Professor Hales also counseled that “material information isn’t necessarily decision-useful [for investors and other stakeholders]. You need to be able to compare standard metrics.” Companies can do this by modeling their report after a well-known ESG framework, especially one that industry peers also use. For a discussion on some of the most popular ESG reporting frameworks, see the next section.

Choosing a Reporting Framework

Once you’ve optimized your reporting approach, the next step is to choose a reporting framework that aligns with that approach. That might seem like a daunting task at first because there are currently over 360 ESG accounting frameworks to choose from.2 ESG consciousness is a relatively new shift among many investors and companies, so there hasn’t been a lot of time for framework creators to come together and consolidate the plethora of frameworks. Some frameworks are far more respected and widely used than others. Professor Hales pointed to the following four frameworks which reflect perhaps the best combination of reputation and usage.

For choosing a reporting framework, consider what kind of reporting frameworks are right for my company? The UN's Sustainable Development Goals focus on the largest global issues; Task Force on Climate-Related Financial Disclosures focus on climate-related issues; Global Reporting Initiative focuses on issues identified through a professionally organized module; Sustainability Accounting Standards Board focuses on an industry-specific set of issues

United Nation's Sustainable Development Goals (SDGs)

The UN’s SDGs are global goals agreed upon by the UN’s participating nations, and they are connected to 17 of the world’s largest issues. A few examples of these issues are no poverty, zero hunger, and climate action. The SDGs are specifically designed for nations rather than companies, so the SDGs do not call for a standardized list of company-level metrics and disclosures. Nevertheless, many companies reference the SDGs when reporting on the impacts of their operations that relate generally to these global goals. In the absence of standardized company-level reporting requirements, firms choose their own metrics to best convey their performance in areas related to the SDGs. For an example of how companies can use the UN’s SDGs in their ESG reports, see AIA Group’s recent ESG report here.

Task Force on Climate-Related Financial Disclosures (TCFD)

As the name says, TCFD provides a framework for reporting solely on climate-related issues that have material implications for companies. The framework calls for companies to describe the following four pieces of information using specific recommended disclosures.

  1. Governance- how the board and company managers oversee risk and opportunities related to climate change
  2. Strategy- how climate-related risks and opportunities (actual and potential) could affect strategy and finances
  3. Risk Management- how climate-related risks are identified, analyzed, and effectively managed
  4. Metrics and Targets- what metrics are used to assess and manage material risks and opportunities related to climate change

The TCFD framework also includes more detailed guides with tips on application and scenario analysis. For an example of how companies can use TCFD’s framework in their ESG reports, see a recent report by Citigroup here.

Global Reporting Initiative (GRI)

Thousands of companies have used GRI guidelines in their ESG reporting, and today GRI provides official standards to help companies form their reports and disclosures on material topics. These standards are organized into modules that help with the aspects of a report:

  • GRI 101: Foundation- applicable to all companies; how to use the modular system in creating your ESG report, how to determine what issues are material to your company, and how to create a report that complies with official GRI standards
  • GRI 102: General Disclosures- applicable to all companies; how to report contextual information about your company and its reporting practices
  • GRI 103: Management Approach- applicable to all companies; how the company manages material topics, and answers why each topic (selected from the three modules below) is material as well as where it occurs in the business
  • GRI 200: Economic- a list of economic issues that companies select from according to materiality; each topic has its own reporting requirements as well as recommendations and guidance
  • GRI 300: Environmental- a list of environmental issues that companies select from according to materiality; each topic has its own reporting requirements as well as recommendations and guidance
  • GRI 400: Social- a list of social issues that companies select from according to materiality; each topic has its own reporting requirements as well as recommendations and guidance

In summary, users go through the introductory modules and then select the topics they are most concerned about from a curated index. Tutorials for using the materials can be found on GRI’s website here. For an example of how companies can construct reports in accordance with GRI standards, see this report here by Dell Technologies, specifically the section titled “Materiality & Our GRI Report.”

Sustainability Accounting Standards Board

Founded in 2011, SASB also provides material disclosure topics and sets of reporting standards by offering the choice of 77 industry-specific standards to report against. Users select which standards to use by entering their company’s information into SASB’s standard’s page and selecting the sector and industries under which their company falls. Users submit the information and then receive two documents: (1) a general guide for constructing their report and (2) an industry-specific disclosure guide containing a list of disclosure topics and specific accounting metrics to use when reporting on each topic. For an example of how companies can use SASB’s framework in their ESG reports, see this recent SASB report by Ford Motor Company here.

Combining Frameworks

Many companies choose to take parts of multiple frameworks when crafting their ESG reports, and some go as far as fully aligning with multiple frameworks within the same report. For an example that features the UN’s SDGs, the TCFD framework, GRI’s standards, and SASB’s framework, see this recent report from Delta Air Lines here.


By refining your company’s approach to ESG reporting and selecting the frameworks that best complement your company’s approach, you can enable your company to reap many of the benefits ESG reporting offers.

Special thanks to Jeff Hales for his time and insights.

Resources Consulted

  1. These benefits and more were summarized from a Bank of America Merrill Lynch report and included in a Markets Insider article. See the full article here.
  2. See the full article by The Economist here.