CDSB: The framework for reporting high impact climate data

Environmental issues and ESG reporting

As the early effects of climate change begin to be felt, with unprecedented heatwaves in Canada and droughts in the US and unusually high temperatures in the Arctic Circle, the need for impactful sustainable action gains more strength.

It is no secret that businesses and business organisations are one of the largest contributors to environmental pollution today. This means that the actions taken by businesses will have a greater impact on the environment than almost any other kind of organisation.

This is why there has been a rise in sustainability professionals and firms integrating sustainability in their activities. As more and more people become aware and recognise the impacts of climate change and how businesses impact the environment, come stronger cries to take action. The stakeholders of a business like its employees, partner organisations, suppliers and so on do have some amount of power to influence its decisions.

One of the most important stakeholders, especially when it comes to influencing a company’s overall strategy are its shareholders or investors.

And because of their strong influence, keeping climate-conscious investors happy is growing in importance to most growing businesses today. Investors who have signed up with the PRI for responsible investing practices represent over $32 Trillion today, a significant increase from the $2 Trillion it represented in 2008.

As such, companies have a strong need to report and communicate sustainability data to their investors. There are several organisations that offer different solutions to this in the form of frameworks and standards, including the likes of GRI, SASB, IIRC and the Value Reporting Foundation.

Each of those frameworks serves different functions in reporting financially material ESG information to stakeholders, including investors. And there are other organisations offering standards for reporting information on specific ESG issues.

About the CDSB

The Climate Disclosure and Standards Board (CDSB) is a consortium of businesses and environmental organisations from around the world, including the likes of CDP, CERES, World Economic Forum. The Climate Registry and several others.

They offer a framework for reporting environmental information with the same amount of importance as financial information. With a framework that is inclusive of both financial and natural capital, they intend to make environmental issues equally accessible to investors as financial information.

Sustainability reporting with CDSB Frameworks

Used by 374 countries across 32 countries, the CDSB Frameworks is a widely accepted tool for reporting environmental data.

Their frameworks are used by businesses across 10 sectors, serving as evidence of their comparability, a useful feature for investors. Being a set of frameworks that are used across multiple industries means there is consistency in how the information is reported. And therefore, investors can analyse the information and compare them easier to facilitate their decision-making process. 

The CDSB Frameworks include guiding principles that ensure that the environmental information in reports is decision-useful to investors. They help ensure the information is correct, complete and supports assurance activities. They also guide the presentation of the information in the reports.

The frameworks also contain reporting requirements that set the type of environmental information that should be reported to investors.

How CDSB Frameworks are different to the likes of GRI

GRI offers frameworks that guide the preparation of a sustainability report for an organisation. It helps determine what data to include in the sustainability report and how they are to be presented. Standards like the SASB are used to present financially relevant sustainability information to the investors, largely through these sustainability reports.

But the CDSB Frameworks do not separate between a mainstream report for investors and a sustainability report.

It believes in including sustainability information as a significant part of the mainstream report that a company prepares with its investors in mind. It guides the selection and presentation of the important sustainability information to be included as part of a company’s annual report.

The idea is to adapt an organisation’s report to effectively include environmental information, rather than create a new report specifically for ESG issues.

This also makes it easier for investors to access important sustainability information since it removes the need for a separate report on sustainability issues. 

Using the CDSB Frameworks

CDSB offers the frameworks for organisations to access and follow in reporting their financially material environmental information. 

But who are the ones that stand to benefit from using these frameworks?

Companies

Companies can use them to include environmental information and their impact on the environment through various activities as part of their reports. This allows them to present a more inclusive picture of their performance to interested parties.

Investors

One of these important parties is the Investors. By gaining access to reports that integrate environmental issues, they have the power to make more informed decisions. It also helps them by assisting in hedging risk, as they can avoid companies with significant environmental issues that could lead to potential losses.

Accounting and other financial services firms

They can provide more comprehensive assurance of companies that report on ESG issues. There is likely to be an increase in demand for these services in the coming years

Stock Exchanges

Being a standardised framework that is used across several industries, Stock Exchanges may use them to enforce listing requirements that pertain to a company’s environmental performance.

Even the likes of Analysts and Regulators will benefit from the use of these frameworks in companies’ reports, potentially paving the way for accelerated sustainable business transformations.

Using the CDSB standards to communicate business sustainability

If you wish to use the CDSB standards in your company’s annual reports, you may demand the accounting firm you are using to integrate them for you.

Alternatively, if the report is prepared in house, you can enlist the help of a firm that focuses on business sustainability. Whichever path you choose, using the CDSB standards will greatly improve your communication of business sustainability to the stakeholders, especially on environmental sustainability grounds.

We at SUSTINARO help you communicate your business sustainability to the stakeholders. And helping you with your reporting is very much a part of the process.

Connect with us now, and take your all-important step towards the strategic and structured communication of your business sustainability.