Implementing a CSR approach
Standards and Frameworks: How to Choose the Right Ones?
Identifying relevant standards and frameworks is essential to enhance and make credible your CSR approach. The multitude of frameworks available today reflects the richness of accessible instruments to support companies at every level of the implementation of their strategy. This diversity also expresses the complexity of the challenges that these companies must address according to their activity and specificities.
What is a framework? What is a standard?
To properly guide your approach, it is important to identify the differences between a standard and a framework because they will not be deployed in the same way.
Frameworks and standards are part of “soft laws”, and their application is voluntary, unlike regulations that are referred to as “hard laws.”
A framework gathers recommendations or guidelines presented by a standardization organization. It is a methodological tool for implementing an approach.
A standard is an established framework agreed upon by the parties directly concerned with the subject or field being addressed, which is validated by a standardization organization. In addition to guidelines, it includes rules of application.
Choosing Standards and Frameworks that Suit Your CSR Strategy
To establish a coherent approach, it is important to take into account that frameworks and standards address different issues or objectives.
The company must first identify what it wants to communicate or deploy in order to choose and correctly apply a framework.
Frameworks can be classified into 5 categories:
- Engagement in sustainable development and social responsibility.
- Implementation of its CSR approach.
- Reporting to report its results according to the objectives it has set for itself.
- Rating to have its non-financial performance evaluated by rating agencies
- Participation in stock indices and rankings given scoring indexes to compare its performance to that of its peers
It will be up to the company to choose the relevant framework based on the chosen CSR approach and the points it wishes to highlight.
For Illustration:
A company can demonstrate its commitment to sustainable development by joining international frameworks such as the Global Compact and the United Nations’ Sustainable Development Goals.
To structure their corporate social responsibility approach, a company can rely on standards and references such as ISO 26000, OECD principles, PRI (Principles for Responsible Investment), and ILO standards.
Reporting standards, such as GRI, integrated reporting, or TCFD, provide companies with methodologies to organize their reporting and define relevant key performance indicators related to their material issues, enabling them to measure their non-financial performance.
Participating in evaluations offered by non-financial rating agencies and analysts, ESG investment funds, etc., allows companies to be appreciated for their efforts in determining their RSE strategy, implementation, and performance. These evaluations offer participants improvement avenues for each issue, which are real assets for evolving their practices. Some of these initiatives include CDP (Carbon Disclosure Project), Ecovadis, MSCI, ROBECOSAM, EthiFinance, Sustainalytics, and V.E (Vigeo Eiris).
Beyond ratings, labels and stock market indices mark the recognition of companies’ CSR commitment, identifying them as “best performers” among their peers. The must-have stock market indices include DJSI (Dow Jones Sustainability Index), FTSE4Good Index Series, Euronext V.E, MSCI, Gaïa Index, Global 100, Ethibel Sustainability Index, and CAC 40 ESG. As for sustainable development labels, there is the Lucie label, the AFNOR “label RSE Engagé”, and others.
To establish a coherent approach, it is important to take into account that frameworks and standards address different issues or objectives.
The company must first identify what it wants to communicate or deploy in order to choose and correctly apply a framework.
Frameworks can be classified into 5 categories:
- Engagement in sustainable development and social responsibility.
- Implementation of its CSR approach.
- Reporting to report its results according to the objectives it has set for itself.
- Rating to have its non-financial performance evaluated by rating agencies.
- Participation in stock indices and rankings given scoring indexes to compare its performance to that of its peers.
It will be up to the company to choose the relevant framework based on the chosen CSR approach and the points it wishes to highlight.
A company can demonstrate its commitment to sustainable development by joining international frameworks such as the Global Compact and the United Nations’ Sustainable Development Goals.
To structure their corporate social responsibility approach, a company can rely on standards and references such as ISO 26000, OECD principles, PRI (Principles for Responsible Investment), and ILO standards.
Reporting standards, such as GRI, integrated reporting, or TCFD, provide companies with methodologies to organize their reporting and define relevant key performance indicators related to their material issues, enabling them to measure their non-financial performance.
Participating in evaluations offered by non-financial rating agencies and analysts, ESG investment funds, etc., allows companies to be appreciated for their efforts in determining their RSE strategy, implementation, and performance. These evaluations offer participants improvement avenues for each issue, which are real assets for evolving their practices. Some of these initiatives include CDP (Carbon Disclosure Project), Ecovadis, MSCI, ROBECOSAM, EthiFinance, Sustainalytics, and V.E (Vigeo Eiris).
Beyond ratings, labels and stock market indices mark the recognition of companies’ CSR commitment, identifying them as “best performers” among their peers. The must-have stock market indices include DJSI (Dow Jones Sustainability Index), FTSE4Good Index Series, Euronext V.E, MSCI, Gaïa Index, Global 100, Ethibel Sustainability Index, and CAC 40 ESG. As for sustainable development labels, there is the Lucie label, the AFNOR “label RSE Engagé”, and others.
What characteristics should be taken into account when choosing a framework or standard of reference?
Sector-specific standards and references
Using sector-specific standards will help the company easily identify material issues that correspond to its industry.
Among sector-specific standards are SASB with an adaptation for 77 industries or the GRI Sector Program, which offers reporting standards specific to activities with the strongest economic, environmental, and societal impacts. GRI aims to develop guidelines for 40 industries in the medium term.
These standards facilitate both the understanding of published information and results, and comparability between companies in the same sector for ESG readers and analysts.
Standards that address all stakeholders of the company
The company must ensure that the choice of reference frameworks includes the expectations of all its stakeholders.
It is essential to identify among all these frameworks which ones are required or recommended by its main stakeholders (investors, customers or clients, banks, etc.) in order to remain attractive and maintain sustainable relationships with them.
A single standard or guideline may not necessarily cover all their requirements. Sometimes, a first approach may need to be complemented by a second or third approach.
Frameworks relevant in terms of material challenges
They help to value and give credibility to a process as they rely on a mature methodology, a robust evaluation system, and a strong reputation among third parties.
Robust standards, widely recognized by peers
The organization must also take into account the frameworks that allow for relevant and concise communication of information about its material challenges.
Frameworks relevant in terms of material challenges
The organization must also take into account the frameworks that allow for relevant and concise communication of information about its material challenges.
Robust standards, widely recognized by peers
They help to value and give credibility to a process as they rely on a mature methodology, a robust evaluation system, and a strong reputation among third parties.
Thematic frameworks
Some of the frameworks mentioned above specialize in specific areas such as climate and carbon emissions (CDSB, TCFD, CDP, GHG Protocol, Carbon Footprint method, etc.), impacts on water, air or forests (CDP), biodiversity (TNFD), responsible purchasing (Ecovadis), or customer relations (INRC). Depending on their activities and priorities, organizations can use these initiatives to delve deeper into these areas.
An ever-evolving field: the importance of monitoring.
Monitoring the evolution of standards is essential: frameworks evolve regularly and new methodological guides are published to enable the entities that use them to improve their understanding and application.
In the face of a multitude of existing approaches, the trend is also towards harmonization and standardization of practices. Numerous frameworks such as SASB and IIRC, or CDP and CDSB, are coming together to coordinate their efforts to offer economic actors complementary tools to help them improve their approach. It is therefore important for any CSR department to be attentive to any updates that could help refine its approach.
To go further :
CDP and CDSB team up to provide the building blocks for successful TCFD disclosure : https://www.cdsb.net/task-force/1039/cdp-and-cdsb-team-provide-building-blocks-successful-tcfd-disclosure
IIRC and SASB form the Value Reporting Foundation, providing comprehensive suite of tools to assess, manage and communicate value :
https://www.sasb.org/wp-content/uploads/2021/06/Value-Reporting-Foundation-Press-Release-Final.pdf
