Investor-led Sustainability Frameworks emphasize financial dimensions of climate-change and its impact of enterprise sustainability and organisational resilience. For example, the United Kingdom has recently become the first country in the world to make an investor-led Sustainability Framework (TCFD) mandatory for premium-listed companies to disclose efforts towards sustainability. This will start with a ‘comply or explain’ requirement by 2023, with full mandatory reporting expected by 2025.
Investor-Led Sustainability Frameworks
The advent of investor-led sustainability frameworks provides companies with a method for incorporating climate change into their business plans by integrating strategy and climate scenario analysis into the financial risks identified by the company. This approach is useful for both investors and financiers alike who are looking for robust data and insightful information that can support investment decisions.
The key investor-led sustainability frameworks are:
| TCFD |
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TheTask Force on Climate-related Financial Disclosure (TCFD) is a G20 sponsored initiative that uses a set of recommendations to assist companies in better accounting for climate-related risks in their financial and mainstream disclosures. Many reporting frameworks are aligning to the sustainability provisions of TCFD.
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| FTSE4Good |
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FTSE4Good is a sustainability reporting framework that is designed to measure the performance of companies with strong Environmental Social Governance (ESG) practices. Companies are required to provide evidence about their ESG practices.
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| DJSI |
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The Dow Jones Sustainability Index (DJSI) is a set of benchmark indices for responsible and sustainable investment. These indices, whether regional or national, assess the performance of companies’ ESG criteria and enable investors to make informed decisions to encourage more responsible investment portfolios. DJSI publishes indices of the top 10% of companies who respond to a questionnaire covering Economic, Environmental and Social issues. |
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| SASB |
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The Sustainability Accounting Standards Board (SASB) publishes 77 industry-specific standards to help businesses identify, manage and report on sustainability topics that matter most to their investors. The industry-specific reporting standards allow for benchmarking and comparison for businesses around the world.
SASB standards draw on accounting principles to align with US financial reporting. The SASB sustainability framework, used by 50 SASB Alliance companies, is focused on industry-specific reporting standards and focused on financially material issues.
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