Challenges in defining the framework for ESG reporting

Abstract

ESG has emerged as one of the most prominent trends impacting corporate governance, management, and investment over the last twenty years. Despite its widespread use, there remains a lack of clarity regarding its application in corporate practice and in defining the correct way companies should approach meeting the need for nonfinancial reporting on the way they conduct their business. As trillions of dollars pour into investment products labeled as ESG, and as companies and regulators engage with ESG policies, the term has taken on various interpretations, causing inconsistencies in the ways in which companies create their ESG reports. This article firstly aims to achieve clarity in defining the ESG reporting framework that can be universally used as a standard form of ESG reports. Secondly, it emphasizes the challenges corporate representatives have in making these reports, and the various differences in the way they are constructed. Finally, it offers a critical analysis of different ESG frameworks and gives guidelines on how ESG reporting should be conducted