What Are ESG Standards?
ESG standards set specific and detailed technical requirements on how sustainability data should be measured, reported, and verified. Standards define the exact methodology and metrics companies must use—creating consistency that enables meaningful comparison of ESG performance across time, industry, and size. Most standards are voluntary and provide supplementary guidance on reporting language, format, and instructions for applying the standard based on unique business characteristics.
Examples of global reporting standards include the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB).
Examples of ESG Standards
While there is no single, universally mandated ESG standard, a few of the most widely recognized and adopted ones are below.
IFRS
The International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards, developed by the International Sustainability Standards Board (ISSB), are designed to help investors and capital markets assess and disclose sustainability-related risks and opportunities.
Its first two standards—IFRS S1 (general sustainability-related financial disclosures) and IFRS S2 (climate-related disclosures)—were published in 2023 and are now seeing rapid regulatory uptake, with over 36 jurisdictions committed to aligning with them.
SASB
The Sustainability Accounting Standards Board (SASB), part of the IFRS Foundation, developed industry-specific disclosure guidance on sustainability-related risks and opportunities covering 77 industries. The standards are designed to identify the most relevant environmental, social, and governance issues that may impact the financial performance and overall enterprise value of an organization. Its open standard-setting approach allows more flexibility to determine what ESG topics are financially material to a business.
VSME
The Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME) offers a streamlined, accessible alternative to the ESRS, helping small and medium-sized enterprises report on sustainability performance in a way that is proportionate to their business needs. The VSME helps SMEs respond to ESG demands from investors and corporate partners in their value chain, improving risk management and access to capital.
With Basic and Comprehensive modules, companies have the flexibility to report based on what’s relevant and their reporting readiness. Aligned with the EU Omnibus I proposal and its “value chain cap” on sustainability data requests, the VSME enables SMEs to demonstrate resilience, manage climate risks, and prepare for evolving regulations.
GRI
The Global Reporting Initiative (GRI) Standards are known as the most widely used standards for sustainability reporting, with over 70% of leading companies globally adopting it as a primary framework for disclosing ESG impact. The GRI standards are built on the principle of impact materiality, requiring organizations to report on how their activities affect the economy, environment, and society.
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What Are ESG Frameworks?
ESG frameworks provide a broad, contextual approach to ESG reporting. Rather than prescribing specific metrics, frameworks define the themes, objectives, and scope of sustainability reporting, guiding companies on what topics to address, the data to collect, and how reporting should be presented. ESG frameworks are largely voluntary, and widely accepted frameworks include the Task Force on Climate-Related Financial Disclosure (TCFD), the Carbon Disclosure Project (CDP), or the UN’s Sustainable Development Goals (SDGs).
Examples of ESG Frameworks
There are many frameworks that support ESG reporting, and here are some of the most widely accepted frameworks.
TCFD
The Task Force for Climate-Related Disclosures (TCFD), established by the Financial Stability Board in 2015, was developed to guide disclosure recommendations for climate-related financial information. It enables companies to be more transparent on their climate-related risk exposures to investors, lenders and insurance underwriters. The TCFD is comprised of 11 recommendations structured around four pillars: governance, strategy, risk management, and metrics/targets.
While the TCFD disbanded in October 2023, the IFRS foundation officially incorporated the full TCFD recommendations in its publication of IFRS S1 and S2 standards. TCFD as a framework continues to be the blueprint for many emerging frameworks and regulations, including California’s SB 261. TCFD-aligned disclosures are now mandatory in many jurisdictions globally, including the UK, Japan, and New Zealand.
CDP
CDP, formerly known as the Carbon Disclosure Project, is an international nonprofit organization that provides the world’s leading environmental impact disclosure system. It enables investors, companies, cities, states, and regions to assess their greenhouse gas emissions and climate risks, driving emissions reductions and strengthening climate resilience.
CDP collects and standardizes environmental data through a voluntary basis to better inform corporate and city progress towards climate change, forests, and water security goals through an independent scoring methodology.
Invest Europe
Invest Europe is the association representing Europe’s private equity, venture capital, and infrastructure sectors, as well as their investors. Its voluntary, principles-based ESG framework is developed specifically for European firms in the private equity and venture capital space and provides guidance on how investors can integrate ESG considerations into the entire investment lifecycle, from evaluation to exit. Invest Europe manages an ESG reporting template for reporting at the portfolio company, GP, and fund levels.
EDCI
The ESG Data Convergence Initiative (EDCI) is a global private markets initiative committed to streamlining the industry’s historically fragmented approach to collecting and reporting sustainability data. The EDCI’s mission is to drive convergence around sustainability metrics to enable meaningful, comparable reporting. Its core metric categories are reviewed annually for relevancy, which currently include greenhouse gas emissions, diversity, and employee engagement.
UN’s Sustainable Development Goals (SDGs)
The Sustainable Development Goals (SDGs) are a set of 17 interconnected global goals designed to address the world’s most pressing social, environmental, and economic challenges by 2030—spanning areas such as climate action, clean energy, gender equality, and responsible consumption. For companies and investors, the SDGs serve as a high-level framework for aligning business strategy and capital allocation with broader societal outcomes.
Why ESG Frameworks and Standards Are Important
With ESG constantly evolving, frameworks and standards help reduce ambiguity and complexity in reporting. They offer a shared language for sustainability disclosures that enables organizations to report reliable, decision-useful data. This consistency also ensures that the reported information remains comparable across peers, industries, and over time for true, meaningful ESG progress.
The Differences Between ESG Standards and Frameworks
The terms “frameworks” and “standards” are often used interchangeably in ESG reporting, but they each serve a distinct purpose.
ESG frameworks are broad and provide a contextual “frame” on how to disclose material topics in reporting. They provide a high-level structure and guiding principles on how data should be presented. Take the TCFD, for example, which provides a framework to report climate-related financial disclosures but leaves the specific data points to the reporting company.
ESG standards, on the other hand, are specific and prescriptive. They define the exact metrics and methodologies that should be disclosed. Standards are valuable for investors who need to compare ESG performance across a portfolio or industry benchmark, as they allow for consistent year-on-year tracking.
In practice, many organizations use frameworks and standards together. Frameworks are applied to shape the structure of the report, while standards ensure that the reported data is rigorous, consistent, and comparable.
Report Confidently with Novata
Novata’s Metrics Library is home to over 4,000 metrics aligned with widely accepted standards, frameworks, and regulations—making it simple to identify a clear starting point for sustainability reporting. Novata supports data collection aligned with EDCI, IDP, SASB, IFRS, TCFD, Invest Europe, ESG_VC.
If you need hands-on support, Novata’s advisory team can help identify and prioritize the metrics that matter most to your business. From initial scoping to ongoing reporting guidance, our experts work alongside you to ensure your sustainability disclosures remain aligned with leading global ESG frameworks, standards, and regulatory requirements.
FAQs
1. How does Novata’s Metrics Library stay updated?
Novata’s team of regional experts continuously monitors global regulatory updates and market developments, ensuring our Metrics Library stays aligned with the latest ESG reporting requirements.
2. How do regulations differ from standards and frameworks?
Unlike voluntary standards and frameworks, ESG regulations are mandatory legal requirements set by governing bodies. Non-compliance can result in significant financial penalties and legal repercussions.
3. How can I choose a reporting standard or framework?
Consider your industry, stakeholder requirements, regulatory obligations, and reporting maturity before selecting the ESG standard or framework that aligns best with your sustainability and business goals.
4. Can a company apply multiple ESG frameworks at once, or use both ESG frameworks and standards at the same time?
Yes, and most do. The key is selecting complementary frameworks and standards that work together. For example, the TCFD can guide the structure of a sustainability report while SASB or GRI standards define specific metrics.
5. How can companies streamline reporting while using multiple frameworks?
Mapping overlapping metrics across frameworks and building centralized data collection processes can reduce duplicated work. Leveraging a sustainability reporting solution like the Novata platform helps you to respond to multiple requests accurately and efficiently.
6. Are ESG standards the same across all industries?
No. Some standards, like GRI, offer universal metrics that apply broadly, while others, like SASB, are designed to be industry-specific. Selecting industry-appropriate standards ensures that your disclosures are relevant, comparable, and meaningful to investors.
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