What is the relationship between ESG sustainability reports and GRI standards, SASB standards, and other frameworks? 

Regarding the structure of ESG sustainability reports, GRI (Global Reporting Initiative) Standards and SASB (Sustainability Accounting Standards Board) Standards are two widely used reporting frameworks globally, each with its own focus on the application, function, or structure configuration of ESG reports. 

1. GRI Guidelines 

The GRI Guidelines provide a comprehensive framework designed to help organizations report on their economic, environmental, and social impacts. The GRI Guidelines emphasize stakeholder engagement and the integration of the Sustainable Development Goals (SDGs), encouraging organizations to report on their contributions to global or regional challenges. 

2. SASB Standards : 

SASB standards focus more on financially relevant sustainability issues, focusing on areas that have a significant impact on investors. SASB provides industry-specific standards to help organizations identify, manage, and report on sustainability reporting issues that have a material impact on business performance.

 3. Application, Function, or Architecture Configuration 

• GRI Guidelines: Provides a universal reporting framework for all organizations, regardless of size. It includes generic criteria (organizational profile, governance, stakeholder engagement, reporting practices) and topic-specific criteria (economic, environmental, social). 

• SASB Guidelines: Provides 77 industry-specific standards, each focusing on several sustainability reporting issues that matter most to investors within that industry.  

4. Application and Function of the GRI Standards The GRI Standards are a set of internationally widely recognized reporting standards designed to help organizations transparently report their economic, environmental, and social impacts. At its core, the GRI Guidelines are about facilitating stakeholder communication and the achievement of sustainable development goals. Its key features include: 

• Transparency: Helps organizations clearly demonstrate their social and environmental impact by providing a detailed set of reporting guidelines.

•  Comparability: Enables external stakeholders, particularly investors and regulators, to easily compare the performance of different organizations. 

• Responsibility: Organizations are encouraged to take social and environmental responsibility and be accountable for the consequences of their actions. 

• Continuous Improvement: Through regular reporting, organizations can track changes in their performance, allowing for continuous improvement in their impact on the economy, society, and environment. 

5. Application and Functionality of the SASB Standards The SASB Standards focus on sustainability issues that have a significant impact on investment decisions, aiming to improve the relevance and consistency of corporate reporting. Key features of the SASB Code include: 

• Investor Focus: Focuses on the sustainability issues that matter most to investors, enhancing the utility and decision-making relevance of reporting.

•  Industry-Specific Standards: Provides 77 industry-specific standards to help organizations identify and report on sustainability reporting issues that matter most to their business.

•  Efficiency: Improve the efficiency and effectiveness of reporting by reducing the reporting of irrelevant information. 

• Communication Bridge: Serves as a bridge between businesses and investors, helping both parties communicate effectively on sustainability issues. 

6. Architecture configuration

•  The main difference between GRI and SASB guidelines in architecture configuration lies in their focus and scope of application. The GRI provides a comprehensive framework suitable for all types of organizations, while the SASB provides industry-specific guidelines that focus on financially relevant sustainability issues. Both sets of guidelines emphasize the importance of sustainability reporting and provide tools for transparency and accountability, but they differ in the focus and detail of reporting. 

• When choosing a reporting framework that suits them, organizations should consider their business characteristics, stakeholder needs, and the purpose of the report. In many cases, organizations may choose to use a combination of GRI and SASB guidelines to meet the needs of different stakeholders and provide a comprehensive demonstration of their economic, environmental, and social impacts.  

The GRI (Global Reporting Initiative) framework provides a comprehensive framework for guiding organizations on how to conduct ESG sustainability reporting. This framework is designed to help organizations transparently report on their economic, environmental, and social impacts. The GRI framework is divided into two main parts: generic standards and topic-specific standards.

•  Universal Standards 

Universal standards apply to all organizations, regardless of size, type, or geographic location. They include the following three aspects: 

1.Organization Profile: Require the organization to provide basic information about its activities, brand, products, and services, as well as its reporting scope and boundaries. 

2.Governance: Involves the organization's governance structure, including the governance system, the organization's senior decision-making body, and employee ethics and integrity issues.

3. Stakeholder Engagement: Describes how the organization identifies and selects its stakeholders, and how they communicate and interact with them. 

4.Reporting Practices: Includes reporting principles, reporting cycles, and reporting scope, guiding organizations on how to prepare and deliver sustainability reporting. 

• Topic-specific criteria 

Topic-specific criteria are classified based on the economic, environmental, and social areas that an organization's activities may affect. They include: Economics: 

1.Covers the organization's economic performance, market presence, and indirect economic impacts. 

2.Environment: Includes the organization's impact on the natural environment, such as material use, energy consumption, water and wastewater treatment, biodiversity, emissions, waste management, and environmental compliance. 

3.Social: Deals with labor practices and decent work, human rights, social impact, product responsibility, and social compliance. 

This framework encourages organizations to select relevant topic-specific criteria for reporting based on their specific circumstances, ensuring that the content of the report is both comprehensive and targeted.  

The SASB (Sustainability Accounting Standards Board) provides a set of industry-specific reporting standards designed to help publicly traded companies disclose financially relevant sustainability reports to investors. SASB standards focus on identifying and reporting sustainability reporting issues that have a material impact on a company's financial performance. The following is a more detailed explanation of the SASB architecture: 

1. Industry-specific standards SASB standards are formulated based on the specific needs and challenges of different industries and currently cover 77 industries. These standards focus on sustainability reporting issues that have a significant impact on the industry's financial performance and are grouped into five dimensions: 

• Environmental: Covers issues such as climate change, resource scarcity, waste, and pollution. This dimension focuses on the impact of business activities on the natural environment and the potential impact of changes in the natural environment on the enterprise. 

• Social Capital: Includes issues such as human rights, employee well-being, and community relations. The social capital dimension focuses on how firms manage relationships and impacts related to broader society. 

• Human Capital: Involves issues such as labor practices, employee health and safety, etc. This dimension focuses on how businesses manage their employee resources to enhance productivity and reduce operational risks. 

• Business model and innovation: including product life cycle management, innovation management and other issues. This dimension focuses on how companies can innovate to address sustainability reporting challenges and maintain long-term competitiveness. 

• Leadership and Governance: Covers issues such as corporate governance, business ethics, and transparency. This dimension emphasizes the importance of corporate governance structures and processes for effectively managing sustainability reporting issues. 

2. Functions and Applications 

(1)The primary function of SASB standards is to provide a clear framework to help companies identify, manage, and report on sustainability reporting issues that have a significant impact on their financial performance. These standards aim to improve transparency and consistency in corporate reporting, thereby helping investors, lenders, and other market participants make more informed decisions. The application of SASB standards helps enterprises: Increase transparency to investors by disclosing sustainability reporting information directly related to corporate financial performance. 

(2)Enhanced Communication: 

• Provides a language and framework for effective communication with investors on sustainability issues. 

• Facilitates Comparison: Enables investors to compare the sustainability reporting performance of businesses within or across the same industry. 

• Supports Risk Management: Helps businesses identify and manage sustainability reporting risks that could impact their financial performance. 

• The implementation of SASB standards fosters dialogue between companies and investors on sustainability reporting issues, helping them better manage their economic, environmental, and social impacts, while providing investors with an important tool for evaluating corporate sustainability reporting performance.