To provide an approach for disclosing decision-useful information in mainstream reports, the primary audience of the CDSB Framework is the investor. Other stakeholders, including regulators and other parties having an interest in capital markets, may also be beneficiaries.
The first version of the Framework focused primarily on climate change risks and opportunities. The scope was expanded to encompass natural capital dependencies, environmental risks and opportunities, policies, strategies and targets, along with environmental results and performance against those targets. In January 2022, the CDSB released a final update to the Framework, which included social issues.3 The update also incorporated biodiversity-related considerations into environmental issues, reflecting the recently published CDSB Framework Application guidance for biodiversity-related disclosures, launched in November 2021.4
The CDSB framework for reporting environmental and social information sets out an approach for reporting that includes guiding principles that characterize the desirable attributes of reported information, including that information 'shall be prepared applying the principles of relevance and materiality'. Also, that 'connections shall be made between environmental, social and other information in the mainstream report', and that 'disclosures shall be forward-looking'.5
In addition to ensuring that the disclosed information is based on criteria suitable for conducting assurance activities, the principles state that the disclosures ‘should look to the future as well as the past and present and should communicate trends and factors relating to environmental information that is likely to affect the organisation’s future performance, position, and development’.6
The reporting requirements, designed to encourage standardised disclosure of environmental information that complements other information in mainstream reports, are:
REQ-01 Governance — Disclosures shall describe the governance of environmental policies, strategy and information.
REQ-02 Management’s environmental and social policies, strategy and targets — Disclosures shall report management’s environmental and social policies, strategy and targets, including the indicators, plans and timelines used to assess performance.
REQ-03 Business risks and opportunities — Disclosures shall explain the material current and anticipated environmental and social risks and opportunities affecting the organisation and the processes used to identify, assess and prioritise the risks and opportunities.
REQ-04 Sources of environmental and social impact — Quantitative and qualitative results, together with the methodologies used to prepare them, shall be reported to reflect material sources of environmental and social impact.
REQ-05 Performance and comparative analysis — Disclosures shall include an analysis of the information disclosed in REQ-04 compared with any performance targets set and with results reported in previous periods.
REQ-06 Outlook — Management shall summarise its conclusions about the effect of environmental and social impacts, risks and opportunities on the organisation’s future performance and position.
REQ-07 Organisational boundary — Environmental information shall be prepared for the entities within the boundary of the organisation or group for which the mainstream report is prepared. Where material, environmental and social information beyond this boundary shall be reported and distinguished. The basis on which the organisational reporting boundary has been determined shall be described.
REQ-08 Reporting policies — Disclosures shall cite the reporting provisions used for preparing environmental and social information and shall confirm that they have been used consistently from one reporting period to the next.
REQ-09 Reporting period — Disclosures shall be provided on an annual basis.
REQ-10 Restatements — Disclosures shall report and explain any prior year restatements.
REQ-11 Conformance — Disclosures shall include a statement of conformance with the CDSB Framework.
REQ-12 Assurance — If assurance has been provided over whether reported environmental information is in conformance with the CDSB Framework, this shall be included in or cross-referenced to the statement of conformance (REQ-11).7
Both the Principles chapter and the Reporting Requirements chapter of the Framework document provide specifics as to the purpose of the specified requirement, along with additional explanatory guidance for implementation.