ESG Maturity: A Software Framework for the Challenges of ESG Data in Investment
Abstract
:1. Introduction
2. ESG Frameworks: Why They Matter and What They Measure
2.1. United Nations Sustainable Development Goals [UN SGDs]
2.2. Global Reporting Initiative [GRI]
2.3. International Integrated Reporting Council [IIRC]
2.4. SASB Sustainability Accounting Standards Board [SASB]
2.5. Sustainable Finance Disclosure Regulation [SFDR]
2.6. Carbon Disclosure Protocol [CDP]
2.7. Task Force on Climate-Related Financial Disclosures [TCFD]
2.8. The Measuring Stakeholder Capitalism Initiative [MSCI]
2.9. Principles for Responsible Investment [PRI]
2.10. United Nations Global Compact [UN Global Compact]
2.11. Universal Declaration of Human Rights [UDHR]
3. ESG Frameworks: Difficulties and Challenges
3.1. Overall Challenges of Frameworks: Diversity, Specificity, and Materiality
3.2. Specific Challenges with ESG Data Reported by the Frameworks:
4. How to Tackle These Challenges in the Future
5. ESG Maturity Software Framework Proposal
5.1. How Does ESG Maturity Work? An Overview
5.2. Characterization of the ESG Maturity Framework
5.3. Other Features of ESG Maturity That Add Value to ESG Reporting
5.4. Possible Limitations of the ESG Maturity
5.4.1. Software Still in Development and Dropout Rates
5.4.2. Constant Need for Updates
5.4.3. Diverting Human Resources to the Software
5.4.4. Limited Inclusiveness
5.4.5. Lack of ESG Literacy
5.5. Companies’ Experiences Using ESG Maturity–Testimonies
6. Conclusions and Study Limitations
7. Patents
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Acknowledgments
Conflicts of Interest
References
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Framework Identification | Framework, Regulation, Initiative or Guideline | Contributions to ESG |
---|---|---|
2.1. United Nations Sustainable Development Goals [UN SGDs] | Framework directed at governments worldwide. | Setting policy priorities/guidelines for governments globally while providing private and public businesses with strategies that are aligned with the SDGs (e.g., counter hunger, poverty, and violations of human rights). |
2.2. Global Reporting Initiative [GRI] | Framework intended for private and public companies. | Providing a practical model for sustainability reporting. |
2.3. International Integrated Reporting Council [IIRC] | Framework designed for providers of financial capital. | Provides a value-creation approach to both reporting and the operations of the companies. |
2.4. SASB Sustainability Accounting Standards Board [SASB] | Framework directed at investors. | Establishing disclosure standards for sustainability reporting, that facilitate the communication of information from companies to their investors. |
2.5. Sustainable Finance Disclosure Regulation [SFDR] | European Regulation relating to the disclosure of sustainability and financial information. | Providing comprehensive disclosure requirements that should be implemented by financial market participants in the disclosure of sustainability-related information. |
2.6. Carbon Disclosure Protocol [CDP] | Framework in the form of a disclosure system associated with the “Environment” dimension of ESG. | Helps determine the environmental impact of the corporate activity of companies, through their questionnaire surveys. |
2.7. Task Force on Climate-related Financial Disclosures [TCFD] | Initiative that targets banks, lenders, and insurance underwriters. | Promoting the integration of climate change disclosures and financial risks/opportunities related to climate change into companies’ risk management and strategic planning processes. |
2.8. The Measuring Stakeholder Capitalism Initiative [MSCI] | Initiative to help companies in reporting non-financial information. | Improving the measurements and disclosure of ESG performance indicators by the companies and monitoring the contributions to the SDGs. |
2.9. Principles for Responsible Investment [PRI] | Initiative that provides general guidelines for institutional investors in sustainable-related areas, as well as reporting companies. | Establishing a set of responsible investment principles for investors to follow, as well as, making them accountable and responsible for their fiduciary duty, as signatories of this initiative. |
2.10. United Nations Global Compact [UN Global Compact] | Initiative aimed at corporate sustainability that intends to mobilize stakeholders and companies worldwide to follow responsible business practices. | Providing companies with a principle-based framework and guidelines, while supporting their signatories through collaboration in the adaption and implementation of business strategies and operations that align with the initiative principles. |
2.11. Universal Declaration of Human Rights [UDHR] | Worldwide-accepted guideline for companies and investors. | Providing guidelines regarding the “S” dimension of ESG and the human rights it should contemplate and guarantee, promoting the implementation of those into their operations. |
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Cruz, C.A.; Matos, F. ESG Maturity: A Software Framework for the Challenges of ESG Data in Investment. Sustainability 2023, 15, 2610. https://doi.org/10.3390/su15032610
Cruz CA, Matos F. ESG Maturity: A Software Framework for the Challenges of ESG Data in Investment. Sustainability. 2023; 15(3):2610. https://doi.org/10.3390/su15032610
Chicago/Turabian StyleCruz, Carolina Almeida, and Florinda Matos. 2023. "ESG Maturity: A Software Framework for the Challenges of ESG Data in Investment" Sustainability 15, no. 3: 2610. https://doi.org/10.3390/su15032610