ESG Frameworks: Choosing the Right One for Your Business

This article was written in collaboration with PM2 Consulting’s executive partner, Brett Knowles. 

ESG is a set of criteria for evaluating an institution’s performance in environmental, social, and governance areas. As ESG becomes more important in investing and business decision-making, stakeholders are becoming more interested in companies’ environmental impact. 

As interest has grown, so have numerous ESG frameworks and standards. Colloquially known as the “Alphabet Soup,” ESG frameworks (like GRI, SASB, and CDSB) have become essential for navigating the complex landscape of ESG.  

In this article, we’re going to clarify: 

• What is an ESG framework 
• Why use an ESG framework 
• The 14 most popular ESG reporting frameworks  
• Pros and cons of each ESG framework 
• How to choose the right ESG framework 

Key takeaway: ESG frameworks offer a clear roadmap toward a more sustainable future by improving ESG performance and reporting. 

Established by institutions such as NGOs and governments, ESG reporting frameworks are composed of guidelines, standards, and principles — these work in conjunction to manage your environmental, social, and governance commitments. 

Typically, ESG reporting frameworks include a range of ESG performance measurements, including board diversity, greenhouse gas emissions, and DE&I.  

They also guide on: 

• What ESG metrics you should track and report 
• How to structure your ESG report 
• How to think about your ESG strategy — processes, tools, people, etc.  

Interested in ESG reporting but need somewhere to start? Dive into the details of ESG reporting here.

ESG reporting frameworks vs. ESG standards

While ESG frameworks provide guidance and best practices, ESG standards are benchmarks of ESG commitment you must meet.  

These represent the quality of your ESG efforts which can be used by investors, rating agencies, and other stakeholders to evaluate performance. 

ESG reporting frameworks go beyond managing ESG efforts. Additional benefits of adopting ESG frameworks include: 

• Meeting stakeholder expectations: Meet the expectations of ESG-conscious stakeholders to build trust 
• Regulatory compliance: With ESG regulations becoming more prevalent, an ESG framework keeps you in the clear 
• Managing risk and opportunities: ESG frameworks can support business longevity by identifying ESG risks and opportunities 
• Standardizing ESG performance: An ESG reporting framework can benchmark your performance against peers through standardized ESG factors 
• Providing a competitive advantage: The use of ESG frameworks can give you a competitive edge by demonstrating your commitment to sustainability 
• Access to capital: An ESG reporting framework can help you attract new investments 

ESG frameworks target one of three different audiences: 

1. Investors: ESG frameworks help inform investor decision-making about a potential investment’s sustainability performance 
2. Government: ESG reporting frameworks serve as guidelines, enabling governments to provide sustainability-related services and support 
3. Management: ESG frameworks translate sustainability-related concepts into tangible activities and outcomes for organizations 

Each ESG reporting framework caters to a specific audience, so there is no singular framework for all the groups.  

We categorize the ESG frameworks below: 

Most ESG frameworks target investor needs, but the most popular framework (i.e., UN-SDGs) targets governments. As another caveat, three frameworks exist for businesses — two are certification-related, not operational.  

Let’s take a closer look at each of these. 

CDSB 

The Climate Disclosure Standards Board (CDSB) is a non-profit organization offering ESG reporting on climate-related risks and opportunities. It covers four key areas: greenhouse gas emissions, climate-related risks and opportunities, carbon pricing, and climate-related financial reporting.  

Advantages 

• Compatible with other reporting standards, such as GRI and SASB 
• Offers standardized reporting to improve investor confidence in company sustainability 
• Enhances consistency and comparability across institutions through standardization 

Disadvantages 

• Lacks authority to enforce reporting requirements 
• Relies on subjective judgments, which can lead to inconsistencies or inaccuracies 
• Limits focus on climate-related risks and opportunities instead of broader ESG issues 

CDP

The Carbon Disclosure Project (CDP) helps institutions report their ESG impact. This ESG framework uses a questionnaire covering climate change, deforestation, and water usage, which then calculates a sustainability score and provides feedback on potential ESG risks and opportunities. 

Advantages 

• Helps identify environmental risks and opportunities 
• Offers benchmarking to show institutions how they compare with peers 
• Facilitates transparency with stakeholders on carbon emissions and environmental impact 

Disadvantages 

• Can be time-consuming and resource intensive 
• Has a limited scope on carbon emissions and environmental impact 
• Doesn't enforce sustainability targets or hold companies accountable 

DJSI 

The Dow Jones Sustainability Indices (DJSI) was launched in 1999 as the first global sustainability benchmark, serving as the lead ESG reporting framework to track ESG performance in top companies. 

Advantages 

• Worldwide credibility as the benchmark for sustainability performance 
• Evaluates companies within their respective industry 
• Assesses companies based on a broad range of ESG factors, providing holistic evaluation 

Disadvantages 

• Uses publicly listed companies — small, family-owned, and private businesses aren’t included 
• Relies on subjective evaluations, which can lead to inconsistencies or inaccuracies 
• Can be resource-intensive, limiting access for smaller companies 

FFBB 

The Future-Fit Business Benchmark (FFBB) is an ESG framework based on systems science, which tells us how our economy would transform if we lived harmoniously with nature. The FFBB translates this into principles, goals, and indicators to guide institutions in getting us there. 

Advantages 

• Covers a wide range of ESG issues — climate change, biodiversity, and inequality 
• Relies on scientific evidence from relevant research on environmental and social issues 
• Provides clear guidance on the to-do's of becoming sustainable 

Disadvantages 

• Complexity requires significant resources and expertise to implement 
• Caters to larger companies — applying the FFBB to specific contexts is challenging for local/regional markets 
• Has a rigid set of metrics and targets that aren’t adaptable 

GRESB

The Global Real Estate Sustainability Benchmark (GRESB) is the widely recognized ESG framework for assessing the sustainability performance of worldwide real estate assets and portfolios.  

It provides ESG performance data and peer benchmarks to inform investment decisions, drive sustainability improvements, and improve real estate sector engagement. 

Advantages 

• Allows real estate companies to showcase their ESG performance with a consistent benchmark 
• Helps companies compare their sustainability performance to peers 
• Covers a comprehensive range of ESG topics 

Disadvantages 

• Time-consuming, requiring significant resources to collect and report data 
• Limited scope on commercial and institutional real estate assets 
• Its rigidity doesn’t account for unique sustainability challenges 

GRI 

The Global Reporting Initiative (GRI) is an independent organization providing a sustainability ESG framework. As the leading standard for sustainability reporting, it focuses on material issues relevant to stakeholders, including universal, sector, and topic standards. 

Advantages 

• Calculates KPIs, enabling an in-depth understanding of environment, economic, and societal impacts 
• Incorporates insights into sustainability efforts with a global reporting language 
• Covers reporting for 34 negative and positive, topic-specific standards 

Disadvantages 

• Can be complex and time-consuming to implement 
• Not comprehensive, widely accepted, or standardized enough for some stakeholders 
• Focuses on disclosure versus ESG performance, where organizations can report on ESG impact without improving it  

ISO 

The International Organization for Standards (ISO) is an independent, non-governmental organization that provides institutions with standards across hundreds of ESG topics. These are consensus-based standards involving industry experts, NGOs, governments, and other global stakeholders. 

Advantages 

• Widely recognized and accepted across the world 
• Improves efficiency, reduces waste, and increases productivity 
• Enables organizations to access new markets, particularly in highly regulated sectors 

Disadvantages 

• Isn’t flexible enough to cover company-specific needs 
• Has the potential to become over-standardized 
• Is voluntary, so doesn’t enforce compliance 

ISSB

International Sustainability Standards Board (ISSB) was first announced by the Trustees of the IFRS Foundation in 2021. These standards will provide a global baseline for sustainability standards, proposing high-quality disclosure on climate and sustainability issues to investors and capital market participants.   

As this ESG reporting framework hasn’t been issued yet, no data on advantages and disadvantages is available. 

SASB 

The Sustainability Accounting Standards Board (SASB) is an ESG framework covering five critical areas of sustainability: human capital, social capital, environment, business model and innovation, and leadership and governance. It includes a research-based approach with open participation from companies, subject-matter experts, and investors. 

Advantages 

• Provides industry-specific standards for reporting relevant and material information to stakeholders 
• Offers free comparable sustainability data for benchmarking  
• Can be combined with other standards and framework (e.g., TCFD) 

Disadvantages 

• Standards are voluntary, potentially leading to inconsistent reporting 
• Focuses on financial materiality, forgoing aspects of sustainability important to stakeholders 
• Complex to adopt, which may require additional expertise 

SBTi 

The Science Based Targets initiative (SBTi) is a collaboration between multiple organizations (e.g., CDP, the World Resources Institute) to help reduce greenhouse gas emissions. This ESG framework offers guidelines for science-based targets across the value chain, including emissions from supply chain, customers, and products. 

Advantages 

• Assists institutions in future-proofing, preparing them for upcoming regulations 
• Helps institutions become leaner, reducing reliance on fossil fuels 
• Improves investor confidence, with SBTi adherence improving business longevity 

Disadvantages 

• Can be time-consuming and resource-intensive 
• Focuses on reducing greenhouse gas emissions — doesn’t consider other sustainability issues 
• Lack of urgency has been critiqued in the SBTi’s approach to the climate crisis 

UN SDGs 

The United Nations Sustainable Development Goals (UN SDGs), established in 2015, lists 17 goals that help create a more sustainable and equitable future. This ESG framework aims to end poverty, protect the planet, and promote peace and prosperity through education, healthcare, gender equality, and clean energy. 

Advantages 

• Addresses the most pressing issues using a common global language and framework  
• Is highly inclusive, ensuring marginalized groups aren’t an afterthought 
• Has clear ESG metrics and indicators, allowing for better progress tracking and accountability 

Disadvantages 

• Sets unrealistic, overly ambitious targets 
• Prioritizes economic growth over social and environmental issues 
• Proposed ESG goals require significant funding 

TCFD 

The Task Force on Climate-Related Financial Disclosures (TCFD) are recommendations for promoting informed investment, credit, and insurance underwriting decisions. 

Advantages 

• Helps institutions understand and manage climate-related risks 
• Provides a standardized approach to climate-related financial reporting 
• Encourages institutions to integrate climate-related information into decision-making  

Disadvantages 

• Focuses on short-term risks and opportunities, as opposed to long-term impacts 
• Emphasizes climate, overlooking other important ESG issues 
• Lacks consensus around some recommendations (e.g., disclosure of forward-looking information) 

Sustainalytics 

Sustainalytics is a global provider of ESG research and ratings, offering company research, risk assessments, and portfolio analytics solutions. These services primarily serve investors, helping them understand the ESG risks and opportunities in their investments.   

Advantages 

• Provides extensive ESG research and ratings 
• Uses a rigorous, transparent methodology to assess ESG performance 
• Tailors ESG research and ratings to specific clients’ needs 

Disadvantages 

• Primarily focuses on large-cap companies 
• Relies on public data to assess ESG performance, which may be inaccurate 
• Can be costly to implement 

WEF

The World Economic Forum (WEF) ESG framework helps institutions report their ESG performance using 21 core and 34 expanded metrics across four pillars — governance, planet, people, and prosperity. 

Advantages 

• Aligns with other ESG reporting standards (GRI, SASB) 
• Covers a broad, comprehensive range of ESG metrics and reporting 
• Credible as an ESG reporting framework 

Disadvantages 

• Still relatively new, making it difficult for companies to benchmark themselves  
• Relies on self-reporting, which may lead to a lack of transparency and accuracy in reporting 
• Extensive metric quantity makes it difficult for companies to report 

With so many ESG reporting frameworks available, choosing one may be overwhelming. Here's what you should consider when picking an ESG framework for your organization:  

• Understand the purpose of your ESG reporting framework to choose a well-aligned solution 
• Assess which ESG frameworks are better suited to specific industries and company types  
• Consider credibility in the ESG reporting framework based on recognition and acceptance by industry stakeholders
• Assess the scope and coverage of ESG factors in the framework  
• Consider the current regulatory environment in your jurisdiction and industry 
• Evaluate if using multiple ESG frameworks simultaneously will create a more accurate ESG report 

Achieving meaningful ESG progress is all about choosing the most aligned ESG reporting framework for your business goals, industry standards, and relevant ESG factors. It’s the difference between truly embedding ESG practices and simply going through the motions.  

Investing in the right ESG framework can demonstrate your commitment to ESG, minimize risks, and unlock new opportunities — ultimately, ESG builds long-term value for stakeholders and drives a sustainable future for your business and the community. 

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