The credibility of corporate "green claims" is increasingly being questioned as sustainability emerges as a key economic priority. Governments, consumers, and investors expect sustainability actions to be validated with uniform, trustworthy, and plain reporting. And this is where sustainability reporting standards come into action.
Reporting standards enable organisations to systematically evaluate, manage, and report on sustainability criteria. Comparable reporting mitigates greenwashing and allows stakeholders to assess whether the organisation's sustainability claims are verifiable. These standards are integral to the development of sustainability leadership for new professionals and executives in courses on sustainable development and sustainability practices.
Sustainability reporting is the process of communicating an organisation's non-financial performance, including metrics such as carbon emissions, labour practices, water usage, and waste disposal. It integrates accountability for the environment and corporate strategy in one aligned report.
Over the last decade, sustainability reporting has evolved from being voluntary to being a business imperative. Of the world’s largest 500 companies, 96% published a sustainability report in 2022, and that number continues to grow as stakeholder expectations and regulations become stricter.
One might ask how it helps. Well, transparent reporting helps companies:
For leaders in sustainability, the challenge is not whether to report but how to do so in a credible manner.
The increase in sustainability disclosures has also brought in "greenwashing," which is overstated and unverifiable environmental claims. Global reporting standards address this by providing a common language and structure for measuring sustainability performance.
These standards make sure that the performance data is:
Using these standards, organisations not only report their sustainability journey but also display accountability and long-term resilience.
The following six frameworks are recognised worldwide and have the most significant impact on shaping sustainability reporting. These frameworks will continue to adapt as the global economy approaches net-zero.
With the European Sustainability Directive (ESD) taking effect in January 2024, the first wave of the Corporate Sustainability Reporting Directive (CSRD) goes live. This groundbreaking legislation paves the way for corporate transparency in Europe. The Directive requires over 50,000 businesses in the EU and beyond to make standardised disclosures on their sustainability practices.
CSRD builds on previous directives and extends sustainability reporting obligations to businesses with over 250 employees and publicly listed companies. CSRD requires reporting of detailed environmental, social, and governance (ESG) data based on the EU Sustainability Reporting Standards (ESRS).
Why it matters: CSRD brings sustainability reporting on par with financial reporting, a crucial step toward embedding ESG into business governance.
Established in 2021, the International Sustainability Standards Board (ISSB), created under the IFRS Foundation, released its first two standards: IFRS S1 (general sustainability disclosures) and IFRS S2 (climate-related disclosures). This was an important milestone aimed at establishing a global baseline for ESG (Environmental, Social, and Governance) reporting.
Beginning in January 2025, and as part of ISSB, the TCFD and SASB frameworks will be incorporated to bridge the divide between financial and sustainability reporting.
Why it matters: For the first time, companies will be able to demonstrate the direct financial impact of sustainability initiatives. This core capability will be fundamental for business sustainability leadership going forward.
The TCFD (Task Force on Climate-related Financial Disclosures) explains to businesses how to disclose risks and opportunities that are climate-related. With almost 2,600 advocates, TCFD is a global reference point for the management of climate risk.
TCFD will be a portion of the ISSB standards as of 2024.
Why it matters: TCFD's importance comes from the fact that climate governance is transcending from mere environmental compliance to the realms of financial risk, a vital consideration for businesses during the net zero transition.
CDP, formerly known as the Carbon Disclosure Project, operates the disclosure system, which more than 23,000 companies utilize. CDP solicits companies to respond to extensive questionnaires from investors concerning climate change, water security, forests, and supply chain impacts, and publishes a score as well as the company's responses, which are then made public.
Why it matters: The importance of CDP lies in the fact that it provides measurable transparency across global value chains and thus promotes accountability and makes value chains more attractive to investors.
The Global Reporting Initiative (GRI) created the world's first reporting standards for sustainability in 1997, and it is still the most widely followed standard, with over 10,000 organisations active as GRI members. GRI's importance can be seen in its incredible reach across the world.
GRI's standards are comprehensive, spanning economic, environmental, and social impacts, making it especially useful for entities considering a wide array of stakeholders, including NGOs and public organisations.
Why it matters: GRI guides companies to go beyond their investors and address the concerns of the broader community, including employees and society.
The Sustainability Accounting Standards Board (SASB) is focused on individual industries and links ESG standards directly to financial performance. SASB is now part of the ISSB framework, but SASB's standards are still used for sector-specific cross-company benchmarking.
Why it matters: SASB allows investors to understand how sustainable practices affect profit, risk, and overall company value.
Sustainability reporting is not just a box to check; it is a powerful strategic tool within a company. In the best case, it streamlines business processes to enhance innovation, efficiency, and resilience.
As more and more organisations adopt these strategies, professionals will increasingly be needed in the areas of sustainability reporting, climate governance, and the building of ESG strategies.
The green transition is upon us, and the need for educated and responsible leadership is crucial. Leaders who are able to decipher, apply, and innovate new ideas and use these reporting frameworks to demonstrate value will be needed.
Online sustainability courses like net zero strategy and sustainability leadership provide new opportunities to understand the CSRD, ISSB, and GRI frameworks and develop skills in climate analytics, ESG strategy, and corporate governance across different disciplines.
As educators, we provide the leaders of tomorrow with the necessary skills and information needed to undertake credible and sustainable transformations and strategic decarbonization.
Check out evACAD's advanced net zero leadership courses to help build your expertise in strategic sustainability leadership, ESG reporting, sustainable development, and climate change.
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