Certification Standards
There are various ESG certification standards, and the following are examples of common ESG certification standards
ISO 14001
This is an environmental management system certification standard developed by the International Organization for Standardization (ISO), aiming to assist organizations in improving their environmental performance. This standard covers requirements related to environmental policy, resource usage, waste management, energy efficiency, and more. It is used to identify every environmental factor throughout the process from raw materials to customers and to control these factors through necessary preventive measures, minimizing harm to the environment. ISO 14001 is a management system designed to systematically reduce and, where possible, eliminate the potential harm that businesses could cause to the environment.
ISO 26000
ISO 26000 provides a comprehensive management framework and is ISO's established guideline for social responsibility, aiming to steer organizations in their conduct concerning social responsibility. It imparts a more structured and systematic approach to the implementation of corporate social responsibility and performance tracking. This standard encompasses requirements related to an organization's ethical behavior, stakeholder engagement, labor rights, human rights, consumer interests, societal concerns, market interactions, and environmental considerations, among several key areas of corporate social responsibility.
GRI (Global Reporting Initiative)
The Global Reporting Initiative (GRI) is an independent international organization that aids global businesses and governments in effectively understanding and communicating the impacts and solutions related to significant sustainability issues faced by organizations through its framework and guidelines. A series of sustainable development reporting guidelines assist organizations in disclosing their environmental, social, and governance performance. GRI's guidelines provide a framework for assessing ESG performance and reporting requirements, while also assisting organizations in achieving transparent and comparable reporting.
UNGC (United Nations Global Compact)
The United Nations Global Compact (UNGC) is a set of ten universal principles formulated for corporate business strategies and policies, encompassing areas such as human rights, labor, environmental protection, and anti-corruption. It is an initiative driven by the United Nations aimed at promoting sustainable development for businesses in terms of human rights, labor rights, environmental preservation, and anti-corruption efforts. Joining the UNGC signifies a company's commitment to abide by its ten principles and to report its performance in these areas.
SASB (Sustainability Accounting Standards Board)
The full name of SASB is the "Sustainability Accounting Standards Board," a nonprofit organization focused on sustainability accounting standards. SASB has developed a set of sustainable accounting standards to assist companies in reporting both financial and non-financial indicators related to ESG (Environmental, Social, and Governance) factors. These standards encompass specific factors relevant to various industries. To enhance investor understanding of a company's value and reduce valuation disparities, SASB has established comprehensive, complete, and quantified sustainability disclosure standards that emphasize both qualitative and quantitative aspects. This approach better addresses investor information needs and helps companies present their performance and value more comprehensively.
TCFD (Task Force on Climate-related Financial Disclosures)
The Chinese abbreviation "TCFD" stands for the "氣候相關財務揭露" (Task Force on Climate-related Financial Disclosures, TCFD), which is an initiative established by the G20's Financial Stability Board. It has released a standardized voluntary set of recommendations for disclosing climate-related financial information. The purpose of TCFD is to address how the financial industry should respond to climate-related issues, assisting investors and relevant decision-makers in better understanding and accurately assessing the climate change risks and opportunities faced by businesses. TCFD requires companies to effectively manage climate change risks and opportunities through four core elements: "Governance," "Strategy," "Risk Management," and "Metrics and Targets." It guides businesses, investors, and managers to focus on relevant issues and provides reliable financial foundation information for stakeholders to reference and evaluate.
LEED (Leadership in Energy and Environmental Design)
LEED, which stands for "Leadership in Energy and Environmental Design," is an environmental sustainability-focused building certification system established by the U.S. Green Building Council (USGBC). It evaluates various aspects of building projects, including energy efficiency, water resource management, material usage, and indoor environmental quality. This certification is related to green and sustainable building practices and serves as a widely recognized and market-oriented standard for green building assessment. It encourages the development and implementation of sustainable building practices and is one of the most widely used green building certification systems internationally. Currently, there are LEED-certified projects in over 182 countries around the world, making it the foremost international green building certification brand. Prominent companies such as Google, Apple, and TSMC have obtained LEED green building certifications, showcasing their commitment to environmentally sustainable practices.
CDP (Carbon Disclosure Project)
CDP is a global nonprofit organization that encourages companies and cities to disclose their greenhouse gas emissions and climate-related information. By participating in CDP surveys, organizations can assess and report their carbon footprint, showcasing their measures to address climate change. The Carbon Disclosure Project (CDP) was initiated by major international institutional investors in 2003, using the power of investors and purchasers to incentivize companies to disclose and manage their environmental impact. The objective is to accelerate climate change solutions by integrating climate-related information into business and investment decisions.
DJSI (Dow Jones Sustainability Indices)
The Dow Jones Sustainability Indices (DJSI) aim to assess corporate sustainability by representing a stock index based on long-term economic, environmental, and social standards. The DJSI is a sustainable development stock index that evaluates companies' performance in the areas of environment, social responsibility, and governance. The index is constructed based on both quantitative and qualitative assessment criteria, incorporating companies into its constituent index to provide a reference for sustainable development investing.
IIRC (International Integrated Reporting Council) Framework
The International Integrated Reporting Council (IIRC) was launched on August 2, 2010, in London, UK, through collaboration between the Prince's Accounting for Sustainability Project, the International Federation of Accountants (IFAC), and the Global Reporting Initiative (GRI). IIRC's member organizations include regulatory bodies, investors, corporations, standard-setting organizations, accounting professional bodies, and non-governmental organizations. Its board members are primarily drawn from significant international organizations such as the United Nations, the International Organization of Securities Commissions (IOSCO), the International Monetary Fund (IMF), IFAC, and the International Accounting Standards Board (IASB). The IIRC Framework provides guidance for integrated reporting, assisting companies in integrating financial and non-financial information to provide more comprehensive ESG reporting. The framework emphasizes six categories of capitals involved in the value creation process, including financial capital, manufacturing capital, human capital, etc., to reveal a company's comprehensive value.
SA8000 (Social Accountability 8000 Standard)
SA8000 is a social accountability standard that assesses a company's performance regarding labor rights and working conditions. This standard is based on a set of international labor organization conventions and covers requirements related to aspects such as child labor, forced labor, wages, and working hours. The SA8000 Social Accountability Standard is a universal standard that can be used by various industries as an authoritative benchmark for social responsibility. It evaluates a company's social responsibility performance across nine major areas, including forced labor, health and safety, freedom of association and collective bargaining, discrimination, punitive measures, working hours, wages, management systems, and child labor. This standard provides a transparent, measurable, and auditable set of criteria for assessing a company's social responsibility performance.
Companies can choose the most suitable ESG certification standards based on their own needs and objectives, and seek guidance, support, and verification from relevant certification bodies. Additionally, companies (organizations) can also seek professional advice based on different market and investor requirements and choose ESG criteria and regulatory frameworks that align more effectively.
