Environmental footprint

ESG reporting covers the disclosure of all qualitative and quantitative environmental, social, and corporate governance data. Its purpose is to inform stakeholders about a company's ESG activities while improving investor transparency and inspiring other organisations to do the same. Reporting is also an effective way to demonstrate that you're meeting goals and that your ESG projects are genuine.

In short, everything a company does as a steward of the environment. It's a container concept that covers, amongst others: How a company is combatting environmental impacts, what a company is doing to reduce carbon emissions; what a company does to preserve biodiversity or improve air and water quality; how it's combatting deforestation; how it's responsibly managing its resources, waste, and supply chain.

Generally speaking, this covers everything that a company does to improve lives. The social umbrella covers how a company nurtures its people and workplace, its community involvement and human rights and labour standards. It also covers a company's inclusivity, employee engagement, and often overlooked social topics such as data protection and privacy.

Commonly, everything an organisation does to stay ahead in proper governance or ensure its investments remain sustainable. A company's internal controls are also considered part of governance, as are its policies and principles and procedures governing leadership, board composition, executive compensation, lobbying, shareholder rights, political contributions, or whistleblower programmes.

ESG scoring is a method to grade organisations on their ESG efforts. Similar to a credit or bond rating, an ESG score denotes a company's ability to meet its ESG commitments, performance, and risk exposure. As more and more consumers and investors have started prioritising ESG ratings, companies have started to take up the mantle to make improvements in theirs as a way to show their commitment.

Currently, companies have much leeway when it comes to ESG disclosure. Generally speaking, they are free to present ESG information in the most helpful way. However, quite a few recognised (and recommended) frameworks use different sets of criteria to score companies.

With DGB, we're willing to work with all of them, but we prefer GRI. For your understanding, we'll list a couple of different frameworks below.

Global Reporting Initiative (GRI).
This framework helps companies disclose their business' positive and negative impacts on the environment, economy, and society. GRI's focus is on helping companies communicate their ESG impacts and how they manage these impacts. GRI is the most referenced ESG framework among all industries, receiving 83% of total references to ESG frameworks.

The Sustainability Accounting Standards Board (SASB)
SASB are a set of standards that help companies collect and share ESG data that affect the firm's business decisions and explain the financial impact of sustainability. It's worth noting that the GRI and SASB joined forces in 2020 and have since published a guide to how organisations can use the two standards together. GRI is known for its high-level scope, while SASB gives companies industry-specific guidelines using a financial lens.

The Task Force on Climate-related Financial Disclosures (TCFD
TCFD is a framework that provides principles-based recommendations for managing and reporting focused primarily on climate risks. It focuses mainly on financial risk disclosures associated with climate to aid banks, shareholders and investors in scrutinising an organisation's ESG efforts.

Carbon Disclosure Project (CDP)
CPD is an international non-profit focused on creating standards companies can use to disclose GHG emissions, water use, and forestry information. This set of standards has helped companies and city, state, and regional government organisations inform decarbonisation and environmental protection efforts.

Streamlined Energy and Carbon Reporting (SECR)
SECR is a framework created by the UK Government that guides organisations on how to report on their carbon emissions and energy usage annually. The framework aims to streamline existing carbon reporting frameworks for greater transparency and comparability while making it easier for companies to monitor and reduce carbon emissions.

The Workforce Disclosure Initiative (WDI)
WDI is an investor collective formed to help companies communicate labour practices to stakeholders. It aims to improve transparency and accountability on workforce issues by providing companies with a framework for disclosing comprehensive and comparable workforce data.