Full Report - Business Sustainability Standards

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Part
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Business Sustainability Standards

Sustainability has become a key factor in investing and operations of many businesses. Below is a summary of key findings on sustainability standards adopted by investors and operating companies.

Standards for Investors

Environmental, Social and Governance (ESG) Standards
Socially Responsible Investing (SRI) Standards
Operating Principles for Impact Management (The Principles)
  • The Principles is an initiative launched by the International Finance Corporation (IFC) to create a framework for impact investing.
  • The framework contains nine principles: 1) define strategic impact objective(s) in consistency with investment strategy; 2) manage strategic impact on a portfolio basis; 3) establish the manager's contribution to the achievement of impact; 4) assess the expected impact of each investment; 5) assess, address, monitor and manage potential negative impacts of each investment; 6) monitor the progress of each investment in achieving impact and respond appropriately; 7) conduct exits considering the effect on sustained impact; 8) review, document and improve decisions and processes; 9) publicly disclose alignment with the Principles and provide independent verification of alignment.
  • A number of investment institutions from around the world have signed to adopt the framework. These institutions include BlackRock, Credit Suisse, European Investment Banks and more. A full list of signatories may be found here.

Standards for Operations

The Greenhouse Gas (GHG) Protocol Corporate Accounting and Reporting Standard
AA1000 Standards
The ISO 14000 Family

Other Standards in the Initial Research

  • The International Integrated Reporting Council (IIRC) focuses on "the linkages between an organization’s strategy, governance and financial performance and the social, environmental and economic context within which it operates."
  • Its purpose is to align capital allocation and corporate behavior to financial stability and sustainable development goals. More details may be found here.
  • GRI and IIRC can be used together. Both are for operating companies.
  • ISO 26000 is a non-certifiable (unlike ISO 14001) guidance for social responsibility, assisting business in translating principles into actions. More details may be found here. This series is also for operating companies.
  • The Organization for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises are government-backed recommendations for multinational enterprises operating in or from OECD countries. The guidelines are for multinational enterprise only. Details may be found here.
  • UN Global Compact is a voluntary initiative based on CEOs' commitment to implement 10 principles of sustainability: two on human rights, four on labor, three on environment and one on anti-corruption. Details on the 10 principles may be found here.
  • UN Global Compact is participated by 10,435 companies in 166 countries. More details may be found here. This is for operating companies.

Research Strategy

To carry out this research, the team examined standards for investors and operating firms separately. On the investors' side, we found that standards were more broadly defined. Therefore, we separated them into three categories. The first two categories were more comparable to each other. Within ESG and SRI, we searched for definitions, distinctions and tools used for measurements. Within the two categories, we provided examples of measurements/criteria (typical indices) and also links to more details and full lists of the indices. The third category is an initiative launched by the IFC, the investment arm of the World Bank Group. The initiative provides a set of principles that signatory investment institutions, many of which are large global firms, must follow. As for the operating firms, we searched for alternative guidelines and reporting to what was provided in the initial research. Additionally, we provided more details on the standards and guidelines that were only briefly mentioned in the initial research.
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