ESG Frameworks: How to Report Sustainability Performance

ESG Frameworks

Global challenges such as climate change have convinced companies and countries to be concerned about the natural and social environment. No longer they aren’t just capital-oriented. Economic sustainability requires the protection of natural and social backgrounds with a sustainable approach, and all these processes are supported by governance. 

For this reason, companies are also giving thought to ESG performance, which is an extension of their corporate social responsibilities as a requirement of the 21st century. ESG performances of companies support their financial values that contribute to their entity from corporate reputation to investment performance. 

What’s ESG? 

ESG is an acronym for the environment, social, and governance. These are called pillars in ESG frameworks and refer to the 3 key areas that companies are expected to report as responsible socially. 

ESG criteria are a subset of non-financial performance indicators. It helps companies in their long-term plans by considering sustainable development.  

•Environmental Impact 

Major issues: waste management, the impact of greenhouse gas emissions, energy efficiency, air and water pollution, environmental protection, biodiversity loss and restoration etc 

The environmental impacts of organisations and countries are examined under this pillar. 

Effectivity in environmental performance; attracts and retains more customers, suppliers, and top talent employees. It also reduces operating costs through better access to resources and less energy consumption. The most important effect is to contribute to a sustainable and liveable world. 

The environment pillar is complex more than other pillars from a reporting perspective.  

•Social Impact 

Major issues: human rights, labour rights, working conditions, health and safety, employee relations, employment equality, gender diversity and pay gaps, anti-corruption, and impact on local communities etc. 

It is concerned with social integration both within the organisation itself and with the wider community. 

Effectivity in social performance; increases the social credibility of the company, raises the morale of its employees, attracts the best talent, and strengthens its relations with the community. 


Major issues: ownership and structural transparency, shareholder rights, independence and oversight of board directors, diversity, data transparency, business ethics, and administrative remuneration fairness etc 

It covers the processes of companies with their senior management staff and shareholders. 

Effectivity in governance performance; facilitates access to grants, ensures better government support and better relations with investors, and helps ensure regulatory compliance. 

ESG Standard and Framework 

In 1990, KLD announced the Domini 400 SocialSM Index, the first socially responsible investment index. Today, there are more than 600 ESG reporting standards worldwide. Many of these standards approach sustainability in different aspects. Different sectors and data types are included in the ESG environment over 30 years of evolution due to this reason there is no single materiality and reporting standard. 

The standards are grouped generally under 4 batches: 

  • Reporting Framework: All questions must be answered and have a typical score. Examples of these frameworks are CDP, ISO, and GRESB. 
  • Goals and Principles: UN Compact, Sustainable Goals, GHG 
  • Regulatory Frameworks: These are the frameworks that are expected to meet all the standards requested mainly by a government agency. Examples are SDRs (Sustainability disclosure regime for the UK) and SFDR. 
  • Rating and Indices: These are the frameworks that emphasize the survey method and scoring. Dow Jones Sustainability Index (DJSI) and Energy Star are examples. 

Due to the diversity of reporting frameworks, which ESG framework to use will depend on the organisation’s goals and stakeholders. If these stakeholders are primarily investors, they may prefer frameworks with a predominant environmental aspect. If shareholders are targeted, reporting can be made with a governance-dominated framework. 

Even in the same industry, companies may have different goals. For example, it can use ESG reporting to make financial decisions or to evaluate its performance against organisations. 

These differences, which are critical to a particular industry from an ESG perspective are called materiality. Companies prepare reports on issues that are important to them. Materiality varies depending on which ESG issue is considered financially significant. 

Why ESG Matters? 

Increasingly more investors are incorporating ESG elements into their investment decision-making processes and are using ESG to secure both debt and equity. 

A company that integrates ESG criteria into its business is less likely to fail with environmental, social, and governance issues, making it a low-risk investment for investors. 

Research conducted by the Taylor & Francis Group on 966 companies over 2 years has shown that companies that integrate ESG factors have less variability in their stock market performance and higher returns than their competitors. It is seen that companies that incorporate ESG criteria as a performance measure into their corporate processes generally produce better financial results when compared to companies that do not focus on ESG criteria. 

ESG frameworks embody the progress towards net-zero emissions that organisations are aiming for. This helps measure progress and keeps companies on track fastly. For this reason, the way to net-zero is through the measurement of ESG performance. 

How to Do An ESG Report?   

Although the ESG may sound like a reporting framework, it was initially an evaluation framework designed for investors. With the evolving ESG environment and changing needs, it is today referred to as the ESG reporting framework. 

There is no standard ESG reporting framework. While the topics to include in the columns are specific, there are differences in subtopics and how they are reported. This leads us to various reporting standards. 

Reports are usually made using one or more of these standards. We can mention the most popular reporting standards GRI, SASB, CDP, SBTi, ISO 26000. Institutions can publish these standards as sustainability reports and ESG performance reports. 

Digital Sustainability Reporting 

ESG reporting as such may seem to have a mixed environment (alphabet soup) consisting of many letters. While many of these frameworks are similar, it can be tiring to keep track of which meets legal requirements or regulations. 

In addition, bringing together the information and data required by the reports and ensuring their follow-up will also cause time and cost. It is a severe burden for a company to report on more than one framework. However, in a system where you can track the data digitally, sustainability reporting will be easier. 

Our Carbon Intelligence Platform leverages powerful automation tools to easily capture sustainability data across your organisation and turn it into a single record system. Thus, you can meet the different needs of both internal and external stakeholders while making safe and easy reporting. 

What you can do with our platform: 

  • You can adapt to ISO 140001, ISO 14064, and GHG Protocol frameworks 
  • You can collect all your sustainability data to present mandatory and voluntary reporting requirements easily. 
  • IPCC, DEFRA, EPA etc… Calculate Scope 1, 2 and 3 GHG emissions and carbon equivalents with an expanding database of global emission factors such as 

With ESG reporting, you can provide your company with a competitive advantage, make it an attractive option for investors, reduce your costs and increase your income and corporate reputation with a positive image.


Irem Altiparmak 

Marketing Assistant at Faradai