See the latest EHS federal and state regulatory updates due to COVID-19

In recent times, the term sustainability has become more prevalent across industry sectors where companies see the value of incorporating measures within their operations to ensure protection of the environment and their communities.

To share this environmental performance information with the broader public, some companies have begun publishing sustainability reports, informed by standards and guidance such as Sustainability Accounting Standards Board (SASB), Task Force on Climate-Related Financial Disclosure (TCFD), Global Reporting Initiative (GRI), and International Petroleum Industry Environmental Conservation (IPIECA).

When determining a reporting protocol, it can be overwhelming to choose from many different options (and acronyms!), so it is of utmost importance that a company aim to be strategic in its selection of the appropriate standards to incorporate into the sustainability report.

We will explore the different standards once we have defined 'sustainability,' and then dive into one of the main steps of preparing a sustainability report - the materiality assessment.

Definition of sustainability

Sustainability is a complex term that can take on many forms; however, the most used definition is the one provided by the UN World Commission on Environment and Development.

“Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

It is important for a company to think about what sustainability truly means to their business enterprise in terms of company mission and culture so they can clearly set goals and eventually report on metrics that matter.

ESG vs Sustainability

Some may use the term 'ESG' interchangeably with the term 'sustainability'; however, it is important to note the difference between the two.

Environmental, social, governance (ESG) is a more focused measurement of a company's business practices under the umbrella of sustainability, which can change drastically based on for whom the ESG report is being prepared. ESG reports should strive to provide detailed and high-quality information tied to relevant ESG topics to be of use to investors who incorporate these reports into their investment decisions.

According to the Sustainability Accounting Standards Board (SASB) State of Disclosure Report, companies used generic, vague, and non-specific language more than 50% of the time across ESG topics1; therefore, it is important that companies avoid this pitfall by focusing more on their audience and tailoring the reported information accordingly.

An example would be if diversity and inclusion is mentioned as an important ESG topic for a company, the report should provide specific details on actual ongoing and future initiatives that help reflect its significance to the company. If the company were to provide language on this topic that was not company-specific, this information would not be as useful for decision-making by its stakeholders2.

Sustainability Reporting Frameworks

Due to the lack of globally accepted standards for sustainability reporting, many companies struggle with the overwhelming number of available frameworks and guidance, which can lead to delays in beginning the process of preparing a sustainability report.

A company should take the time to familiarize themselves with the available information and decide which combination of standards and/or frameworks work best for the company's current and future sustainability performance.

Below is a list of the more commonly used standards and frameworks, both in the U.S. and globally:

  • Global Reporting Initiative (GRI): GRI is an independent and international organization that helps companies understand and report impact on sustainability issues related to the environment, human rights, governance and social well-being.
    • More than 75% of world's largest 250 corporations use GRI's sustainability reporting framework.
  • Sustainability Accounting Standards Board (SASB): SASB is a non-profit whose sustainability accounting standards help companies disclose material useful to investors.
    • The standards are developed through a transparent process with feedback from companies, investors, and other market participants and differ by industry.
  • Carbon Disclosure Project (CDP): CDP is an international not-for-profit organization that helps companies and cities measure, disclose, and share environmental information.
    • Areas of focus for CDP reporting include climate, water, and forests.
  • Task Force on Climate-Related Financial Disclosures (TCFD): TCFD recommendations aim to link the connections between climate-related issues and financial impacts and are focused on forward-looking information.
    • The recommendations are structured around four elements related to how organizations operate: governance, strategy, risk management, and metrics and targets.
  • International Petroleum Industry Environmental Conservation Association (IPIECA) Sustainability Reporting Guidance: IPIECA is a global oil and gas industry association which develops and shares knowledge to support the oil and gas industry in improving environmental and social performance.
    • Their sustainability reporting guidance is a useful framework for oil and gas companies that are either preparing or improving their sustainability reports.

Materiality Assessment

Sustainability and ESG disclosures can look very different between and within industries since each company will have different 'material' topics based on their priorities, risks, and main stakeholders.

According to the Global Reporting Initiative (GRI), a material topic is a topic that reflects an organization's significant economic, environmental, and social impacts or that substantively influences the assessments and decisions of stakeholders.

However, the International Petroleum Industry Environmental Conservation Association (IPIECA) defines material issues as those that, in the view of both management and external stakeholders, have the potential to significantly affect a company's sustainability performance and stakeholder awareness, assessments, or decisions.

Since there is a subtle difference between these two definitions, a company must be clear about which definition they choose to assess their material topics. The materiality assessment is at the heart of the process of developing a sustainability report or ESG disclosure. Identifying and prioritizing material topics for your company is key to a balanced report, accounting for multiple perspectives of a company's sustainability performance.

Completing this assessment on an annual, or biannual, basis is also an important part of the process to ensure a company is regularly staying up-to-date on the most relevant material topics, which could change based on company performance and ESG goals.

Interest in sustainability reporting will continue to rise and it is important that a company gets ahead of telling their own sustainability story.

Please contact Rich Pandullo or John Fillo with any questions regarding the information within this article or advice for your sustainability report.

1 Sustainability Accounting Standards Board (SASB) (2017). State of Disclosure Report - 2017. Retrieved from

2 A stakeholder is any individual that could reasonably be expected to be significantly affected by a company's activities, products, and services or whose actions can reasonably be expected to affect the ability of the organization to successfully implement its strategies and achieve its objectives (examples include employees, local communities, investors, NGOs, etc.)