The Regulations

esg regulation explained

The driving force of standardisation

Many founders and investors are awash in spreadsheets trying to answer a growing list of questions for a myriad of frameworks, principles and guidelines. If it seems never ending, the bad news is it’s likely to get a lot worse.

Investors in the EU, UK and US are required to report ESG in line with new regulations, which also require them to report on their portfolio companies. All this means yet more spreadsheets for SMEs and VCs… and even more resources to field the growing flow of questions. But there is an upside.

Because everyone has to report in the same way, regulation will become the driving force in standardisation. Cherry-picking ESG measures and data suppliers today can ultimately only lead to multiple suppliers, more expense and more confusion when it comes to reporting 2-3 years from now. The measures regulators require become the reality of what needs to be reported. De facto.

The same standards as financial reporting

On 3 November 2021, the International Financial Reporting Standards (IFRS) announced the creation of the ISSB – the International Sustainability Standards Board.

The intention is for the ISSB to deliver a comprehensive global baseline of sustainability-related disclosure standards for ESG. It answers calls for an ESG equivalent of the international financial reporting standards (IFRS) or GAAP i.e. generally accepted accounting principles, standards, and procedures.

Just as the standards for financial reporting are reduced for small businesses, a lite-version of ESG reporting for SMEs (and their VCs and PE funds) is on the horizon.

“Just like your financials, ESG accounts and the decisions you make are only as good as the data they are based on”.

Whether you’re a founder or VC, building audited sustainability data into your brand story appeals to customers demanding sustainable products and services, employees looking to join companies who share their values and LPs under pressure from regulators.

esg environmental social governance
esg frameworks compared

Always be ‘compliance-ready’

You can be certain that your ESG impact is always ‘compliance ready’. ESGgen’s calculations and benchmarks are regularly updated in line with best-practice and changing regulations. And our Auditors undertake Continuous Professional Development (CPD) as part of their professional code of ethics.

Of the leading ESG frameworks and principles based guidelines, ESGgen has the highest alignment with the EU Taxonomy (71%) providing the best coverage of the required data points from the fewest number of measures (31) – an ‘efficiency per metric’ of 2.3%.