Comparing sustainability reporting proposals

Sustainability reporting continues to develop at a fast pace. Last year saw the publication of three sets of proposed standards: from the International Sustainability Standards Board (ISSB), the US Securities Exchange Commission (SEC) and the European Financial Reporting Advisory Group (EFRAG).

The aim of the ISSB proposals is to create a global baseline for investor-focused sustainability reporting that local jurisdictions can build on. There is commonality among each of the proposals issued by the ISSB, SEC and EFRAG – including that the Task Force on Climate-Related Financial Disclosures (TCFD) 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.

For multi-nationals and others needing to apply multiple frameworks, the challenges would be magnified if the requirements are not compatible. A key practical consideration is aligning calculation methodologies – minimizing the different data requirements.

Achieving a global baseline would support companies in applying the standards, as well as drive consistent reporting across jurisdictions – reporting that is internationally comparable, but also meets local needs.

• Two ISSB proposals
  • Investor focus
  • General principles, including proposed requirement to report across all sustainability-related risks and opportunities (not just climate)
• Twelve EFRAG draft standards
  • Multi-stakeholder focus, including investors
  • Core principles for disclosure
  • To date, granular requirements published for sustainability impacts, risks and opportunities
• One SEC climate proposal
  • Investor focus
  • Detailed requirements to report on climate only

Find out more details on how each of the proposed standards differ here.

With all the differences and similarities that exist between each proposal, how do companies prepare themselves? We have listed four steps that will kick-start you on your sustainability reporting journey.

1. Educate your organization on the proposals, including the people, processes and technologies needed to accomplish what would be required across the frameworks.
2. Determine how ready you are by considering the impact of applying multiple frameworks across subsidiaries that would be subject to differing frameworks and how to apply the requirements at the most efficient level.
3. Develop your reporting readiness by taking stock of the differences between frameworks and how the various proposals would impact your disclosures and the need to enhance documentation, processes, systems, controls and data quality of key disclosures.

Use data, technology and analytics to foster better outcomes. Data can provide insights into market opportunities, leading practices and target operating models. It can enable climate ambitions and enhance quality levers.