Reporting Frameworks Explained: Choosing the Right One for Your SMB

Navigating the world of ESG reporting can feel overwhelming, especially when faced with a sea of acronyms like GRI, SASB, TCFD, and the newer VSME framework. Each serves a unique purpose, and choosing the right one can make the difference between clarity and confusion.

For SMBs, the goal isn't just compliance but creating meaningful insights that drive business growth and resilience. In this guide, we’ll break down the most common ESG frameworks, highlight their strengths, and help you choose the one that best fits your business.

1. What is an ESG Framework?

An ESG framework is a standardized set of guidelines that businesses follow to measure, report, and communicate their environmental, social, and governance (ESG) performance.

Why Are ESG Frameworks Important?

• Ensure consistency in ESG disclosures.
• Build credibility with stakeholders.
• Simplify data collection and reporting processes.
• Stay compliant to not lose deals

Example: Just like financial reports follow accounting standards, ESG reports rely on frameworks to ensure data accuracy and comparability.

Key Insight: A clear ESG framework aligns sustainability efforts with measurable business goals.

2. Overview of Popular ESG Frameworks

Global Reporting Initiative (GRI)

• Focus: Broad sustainability reporting across industries.
• Best For: Businesses aiming for comprehensive ESG transparency.
• Strengths: Global recognition, standardized disclosures.

Sustainability Accounting Standards Board (SASB)

• Focus: Industry-specific ESG metrics.
• Best For: SMBs looking for sector-focused reporting.
• Strengths: Precision and relevance to industry-specific risks.

Task Force on Climate-related Financial Disclosures (TCFD)

• Focus: Climate-related financial risks.
• Best For: Companies with significant exposure to climate risks.
• Strengths: Financial risk alignment and investor communication.

VSME Framework (Specifically designed for SMBs)

• Focus: Simplifying ESG reporting for small and medium-sized businesses.
• Best For: SMBs operating in Europe.
• Strengths: Easy to implement, tailored for SMB resources and capabilities.

Key Insight: SMBs in Europe should start with the VSME framework due to its simplicity and relevance.

Are you looking for a guide specifically for the Danish market? Look no further!

3. How to Choose the Right ESG Framework for Your SMB

Choosing the right framework depends on your business goals, industry, and resources.

Steps to Choose an ESG Framework:

1. Identify Your Reporting Goals: Compliance vs. strategic growth.
2. Assess Industry Requirements: Some industries have specific reporting expectations.
3. Evaluate Resources: Time, personnel, and budget availability.
4. Consider Stakeholder Expectations: Investors, clients, and employees.

Example: An SMB in manufacturing might prioritize SASB for industry-specific metrics, while a tech startup could benefit from the simplicity of VSME.

Key Insight: Start with one framework, then expand if needed. There is no doubt that regulation will change in the future, but choosing a framework is the first step, no matter what happens.

4. Common Mistakes When Implementing an ESG Framework

1. Trying to Follow Every Framework at Once

• Problem: Leads to complexity and burnout.
• Solution: Start with the most relevant framework and scale gradually.

2. Ignoring Material ESG Topics

• Problem: Wasted resources on irrelevant data points.
• Solution: Conduct a Double Materiality Assessment.

3. Inconsistent Data Collection

• Problem: Unreliable results and poor reporting.
• Solution: Implement a structured data plan.

Key Insight: Simplicity and focus drive better ESG outcomes. There are no hard deadlines, but a few things you may need to keep under advisement. So dont panic! We have made an overview for you to evaluate the most important deadlines as an SMB.

5. How Wardn Simplifies ESG Framework Implementation

Wardn is built with SMBs in mind, offering tools that make ESG reporting effortless:

• Framework Alignment: Automatically aligns data with frameworks like GRI and VSME.
• Simplified Data Collection: Easy-to-use dashboards and automated workflows.
• Accurate Reporting: Generate compliance-ready reports with a single click.

Key Insight: With Wardn, SMBs can focus on sustainability, not spreadsheets.

FAQs

1. What is the easiest ESG framework for SMBs? The VSME framework is specifically designed for SMBs and is the most accessible.
2. Can I use multiple ESG frameworks? Yes, but it’s best to start with one and expand as needed.
3. How do ESG frameworks differ? GRI focuses on transparency, SASB on industry specifics, and TCFD on climate risks.
4. Do I need ESG software for reporting? While not mandatory, ESG software streamlines data collection and reporting.‍
5. How often should I report under an ESG framework? Annually is standard, but regular updates are encouraged.
6. Is the CSRD a framework? No. The CSRD is a directive that forces companies to report on non-financial metrics. The frameworks are what dictates what those metrics are.