Site loading image


Why Are ESG Frameworks Important?

April 13, 2022

Today, environmental, social and governance (ESG) factors have become value drivers, and many organizations feel the pressure to act with more accountability and transparency. In September 2021, ESG fund assets under management were up to $330 billion in the U.S. Sustainability issues have become imperative across the full spectrum of stakeholders — communities, shareholders, suppliers, employees and customers.

ESG standards significantly impact long-term growth, leading many companies to integrate ESG reporting into their corporate social responsibility (CSR) strategies. ESG assessment frameworks are broad and diverse, and establishing a reporting system that covers your industry’s most relevant metrics can be challenging.

TRC can help you choose the best reporting framework for your organization.

What Is ESG?

ESG is an investing term synonymous with sustainable investing. While ESG has historically been the focus for environmentally-friendly business leaders, it’s now an essential topic for supervisory personnel looking to boost performance.

Personal and institutional investors often use ESG reports to measure and analyze performance factors. Regulators may also use ESG reports to observe human rights, natural resource use and carbon emissions.

Recent events have sparked a new urgency for businesses to focus on the following:

  • Governance: Procedures, controls, business ethics and compliance
  • Social Responsibility: Product liability, diversity and inclusion, human rights and labor relations
  • Environmental Responsibility: Climate change, waste management and energy use

What Is an ESG Framework?

ESG frameworks standardize ESG metric disclosure and reporting. These frameworks are put together by business groups, nongovernmental organizations (NGOs) and nonprofit organizations, which vary greatly in focus areas and the metrics they recommend.

ESG frameworks help companies positively impact the world and are often voluntary but may be required by regulations in some countries.

Why Are ESG Frameworks Important?

Reporting on ESG has been shown to have many benefits for an organization:

  • Strong ESG policies can help companies reduce waste, water and energy costs and drive more strategic resource allocation.
  • Investors are increasingly considering ESG as an essential aspect of the investment process.
  • Consumers are putting more pressure on companies to be more environmentally and socially responsible.
  • ESG reporting can help attract talent and contribute to employee productivity and morale.
  • Most businesses participate in ESG reporting, so a lack of participation may cause some to risk falling behind the competition.

Popular ESG Frameworks

There are more than a dozen popular ESG frameworks. Some of the more well-known ESG frameworks include:

Learn More About ESG Reporting

In recent years, many businesses feel a renewed urgency to enforce core values that protect human health and rights, corporate behavior and the environment — the very pillars of ESG.

Industries worldwide turn to dozens of ESG frameworks, so it’s no wonder companies may find it challenging to know where to start with ESG reporting.

Looking for effective solutions to your problems?

Turn to the experts at TRC.

By clicking "Accept", you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. Read our Privacy Policy.