30 November 2022 (Updated 15 November 2023)1
Sustainability reporting is developing quickly, with new requirements2 from the International Sustainability Standards Board (ISSB) and EU, and proposals from the US.
The aim of the ISSBTM Standards is to create a global baseline for investor-focused sustainability reporting that local jurisdictions can build on.
What’s the issue?
There is commonality among the requirements – including that the TCFD3 framework forms a shared input.
However, there are also areas where they are not aligned, which may create practical challenges for companies trying to design coherent and consistent reporting that meets the needs of both global investors and jurisdictional requirements. In addition to points of detail, this includes the greater scope and scale of the European Sustainability Reporting Standards (ESRSs) with their wider stakeholder focus.
What’s the impact?
The requirements are ambitious and will have a significant impact on companies.
For multi-nationals and others needing to apply multiple frameworks, the challenges will be magnified if the requirements are not compatible. A key practical consideration is aligning calculation methodologies – minimising the different data requirements.
Achieving a global baseline will support companies in applying the standards, as well as driving consistent reporting across jurisdictions – reporting that is internationally comparable, but also meets local needs.
What’s next?
Read our guide (PDF 1 MB) to gain further insight on some of the practical challenges you may encounter as you prepare for the new sustainability reporting standards.
- Understand where similarities and differences exist between the requirements that may affect you.
- Identify what you will be required to report vs what you may choose to adopt.
- Prepare for fast adoption of the requirements that may affect your company.
Our dedicated Sustainability reporting page will keep you up to date with the latest developments in this area.
Our Sustainability reporting resource centre and ESRSs Sustainability reporting resource centre provide practical guidance to help you get ready for the new standards. These resources capture the latest thinking together with our insight.
1 This article and its accompanying guide have been updated for developments in the requirements.
2 We use the term ‘requirements’ to refer collectively to:
- the final standards from the ISSB, referred to individually as IFRS® Sustainability Disclosure Standards or ISSB Standards;
- the final text of the first set of ESRSs from the EU, referred to as European Sustainability Reporting Standards (ESRSs); and
- the proposed requirements from the US, referred to as the proposed US SEC climate rule.
This article relates to the requirements as of 31 July 2023.
3 Task Force on Climate-related Financial Disclosures.
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