GRI most popular ESG reporting framework

According to a new survey, the Global Reporting Initiative (GRI) Standards are the most popular ESG reporting frameworks used by the largest asset owners across the US and Western Europe.

GaiaLens’ latest CIO Survey found more than half (57%) of the CIOs and investment decision makers at largest asset owners on both sides of the Atlantic use GRI Standards because they are considered the world’s most comprehensive and widely used standards for sustainability reporting. “These standards help organisations understand their outward impacts on the economy, environment, and society, including those on human rights,” said the report.

Firms have the ability to use the standards to prepare a sustainability report in line with GRI’s framework, or use selected standards to report information for specific users or purposes, such as reporting climate change impacts for their investors and consumers.

GaiaLens’ survey found the UN’s 17 Sustainable Development Goals (SDGs) were the second most popular standards, with 44.5% of asset managers using them to guide their ESG reporting.

In third place was the Taskforce on Climate-related Financial Disclosures (TCFD), which is used by 30% of the largest asset owners across the US and Western Europe, according to GaiaLens.

Europe leads the way

GaiaLens’ report found GRI, UN SDGs and TCFD ESG reporting frameworks are used by more Western European asset owners than US-based allocators. Broken down:

GRI standards are used by:

• 60% of Western European asset owners
• 54% of US-based firms

UN SDGs are used by:

• 48% of Western European asset owners
• 41% of US-based firms

TCFD is used by:

• 32% of Western European asset owners
• 28% of US-based firms

Other ESG frameworks

SASB

On the contrary, the Sustainability Accounting Standards Board (SASB) standards are used by a third (33%) of US asset owners, compared to only 19% of Western European firms.

SASB standards identify the subset of ESG issues most relevant to financial performance in 77 industries. They are designed to help companies to disclose financially material sustainability information to investors.

EU Taxonomy

As you’d expect with a European framework, the EU taxonomy has a stronger following in Europe, with around a quarter (27%) of Western European firms already using the upcoming standard, which officially launches on 12 July 2022. In comparison, the EU Taxonomy is currently only used by 7% of US-based firms.

According to GaiaLens, the EU Taxonomy could help the EU to increase sustainable investment and implement the European green deal. “The EU taxonomy would provide companies, investors and policymakers with appropriate definitions for which economic activities can be considered environmentally sustainable,” said the report. “In this way, it should create security for investors, protect private investors from greenwashing, help companies to become more climate-friendly, mitigate market fragmentation and help shift investments where they are most needed.”

Doing our own thing

A very small minority of firms across both sides of the Atlantic have taken matters into their own hands and developed their own ESG reporting frameworks. GaiaLens found this to be true of 8% of US-based firms and 4% of Western European asset owners.

GaiaLens commissioned US-based investment market specialist research agency Beresford Research to conduct the 26-question CIO Survey. It received a total of 200 responses, 50% of which were US-based asset owners and the remaining 50% from Western Europe.

Of those who participated, 53% were CIOs, 24% were heads of sustainability and the remaining 23% were heads of ESG integration. All respondents confirmed their organisations had incorporated ESG factors into their investment decision-making processes.