Sustainability Standards and Frameworks

TCFD is a principles-based framework that offers a set of recommendations for organisations to address climate risks and opportunities by disclosing information related to governance, strategy, risk management, and metrics and targets. 

Better disclosure on the financial impacts of climate-related risks and opportunities for an organisation is a key goal of the TCFD’s work. TCFD illustrates how climate-related risks and opportunities are likely to impact an organisation’s current and future financial position as reflected in an organisation’s income statement, balance sheet and cash flow statement. 

Supporters of TCFD have significantly grown around the world over the past few years. Some jurisdictions e.g., New Zealand and UK have mandated TCFD disclosure requirements. TCFD disclosure is not yet mandatory in Australia. 

Published in 2018 by the Sustainability Accounting Standards Board, the SASB Standards provide a set of industry-specific standards that identify the financially material sustainability topics across Environmental, Social and Governance issues and their associated metrics in each of the 77 industries. SASB Standards help investors / providers of capital understand the aspects of an organisation’s sustainability performance that are material for enterprise value creation so that they can incorporate these factors into their investment analysis and processes. 

Over 2,000 companies worldwide have adopted the SASB Standards either partially or fully. 40% of users are domiciled in the US but there is increasing uptake of the standards internationally. In Australia, over 50 listed companies have used the SASB Standards. SASB is now part of the IFRS Foundation.

Developed by the Global Sustainability Standards Board (GSSB), the GRI Standards are the world’s first global sustainability standards and the most widely used standards for sustainability reporting.  

The GRI Standards are a modular system that comprises of three series of standards: the Universal Standards, the Topic Standards, and the Sector Standards. The Universal Standards apply to all organisations. The Topic Standards contain disclosure requirements on topics such as waste, occupational health and safety, and biodiversity. The new Sector Standards provide sector-specific disclosure requirements. GRI plans to develop standards for 40 sectors. So far, the Sector Standards for oil and gas, coal, as well as agriculture, aquaculture and fishing have been released.

Under the GRI Standards, organisations need to report not only the ESG matters material to the organisation but also the matters that have significant impacts on the economy, environment and people, including human rights (i.e., double materiality). Audience does not only include investors / providers of capital but also a broader set of groups including the civil society, communities, employees, customers, governments, and suppliers. 

Launched in 2013 by the International Integrated Reporting Council (IIRC), the International Integrated Reporting framework is a concise communication about how an organisation's strategy, governance, performance and prospects lead to the creation, preservation or erosion of value over the short, medium and long term. 

At the heart of <IR> is the growing realisation that a wide range of factors, referred to as the six capitals in the <IR> Framework, determine the value of an organisation. Value creation is a fundamental concept of the <IR> Framework. 

Integrated Thinking is another core concept of the <IR> Framework that considers the connectivity and interdependencies between capitals, stakeholders’ needs and interests, external environment, risks and opportunities, an organisation’s activities, and performance and outcomes. <IR> reports provide a more holistic view of business than traditional annual reports.  

Over 1,500 companies worldwide have reported under the <IR> Framework, among them 25 are in Australia. <IR> is now part of the IFRS Foundation. The IFRS Foundation is committed to integrating the <IR> Framework into its sustainability standards setting.