Sustainability Reporting

Consolidated global reporting: the harmonisation of ESG reporting frameworks

March 18, 2024

Sustainability reporting is full of acronyms, which is a clear sign of the abundance of global standards on the market, all representing different means to the same end. Unfortunately, investors want clarity, regulators want consistency, and companies want finality. All parties are a little confused, and the market is ripe for a breakthrough.

In this article, we will discuss current efforts of consolidated global reporting and examine the International Sustainability Standards Board's (ISSB) sustainability standards and their impact on integration with other standards.

Challenges in the ESG reporting landscape

At the ecosystem level, ESG (= Environment, Social, Governance) reporting is a fragmented puzzle of various sustainability frameworks and standards. This puzzle creates confusion about which standards companies should use. There are often discrepancies between investors who want to understand companies' ESG performance and the companies that report on their performance.

Most reporting standards overlap in terms of various ESG aspects and differ in the details, such as how and what to report on. Fundamentally, the principles and emphasis of each standard differ, with some emphasizing the connection between ESG and financial performance more than others.

This makes it difficult to compare the ESG performance of different companies. However, this is crucial for investors to make informed decisions and manage risks and opportunities related to sustainability.

Harmonisation of reporting frameworks

Due to the abundance of reporting standards, efforts are being made to develop a consolidated global reporting.

Regulators have played a significant role in these efforts, as evidenced by new laws such as the EU Directive on Corporate Sustainability Reporting (CSRD) and the UK Sustainability Disclosure Requirements (SDR).

Both aim to increase the transparency of ESG information and reduce greenwashing by integrating requirements into a single framework.

Meanwhile, independent organizations such as the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) have also taken steps towards integration:

  • In 2021, the SASB merged with the International Integrated Reporting Council (IIRC) to form the Value Reporting Foundation (VRF).
  • The VRF and the Carbon Disclosure Standards Board (CDSB) were integrated into the International Sustainability Standards Board (ISSB) of the IFRS Foundation. It works as the key body developing a comprehensive global basis of reporting standards that can be used by capital markets.
  • As a result, the GRI has agreed to work with the ISSB to align reporting. All eyes are now on the ISSB to pave the way for a long-awaited universal standard that will solve the challenges of the current reporting landscape and bridge the differences.

While harmonisation is underway, the respective standard-setting bodies will maintain their standards. It is worth noting that independent standards are quite interoperable, as they can complement each other. However, most companies that use a mix of two standards generally try to meet the requirements of one standard and use the other to supplement reporting in cases where the first standard may not be sufficient.

Example of harmonising Reporting Standards

A metal and mining company that meets GRI disclosure criteria for a range of stakeholders may use SASB standards to provide more depth on issues in its industry that have significant financial impacts.

Challenges of harmonisation

There are two prevailing approaches to existing standards:

  • The sector-based approach, in which reporting guidelines are sector-structured.
  • The thematic approach, which focuses reporting on material themes.

The consolidated framework will have to strike a balance between the two, making room for topical depth and industry focus but also universal applicability.

It remains to be seen how the ISSB intends to integrate these areas. Given its investor-oriented mandate, in which financial information plays an important role, it will most likely tend towards double materiality, but considering the GRI standards, which are more oriented towards stakeholders, it could choose a loose approach to double materiality.

The other challenge in consolidation is the materiality approach. Reporting frameworks focused on the EU have mostly emphasized double materiality, while the US-based SASB standards, now part of the ISSB, use the principle of single materiality.

This is a significant gap and raises whether this could lead to a division into two worlds – the EU approach and the US approach. This would contradict the goals of global harmonisation.

Furthermore, this could create incentives for both approaches to advance their agendas, as the dominant approach for reporting on the future relationship between companies and ESG could be decided.

Benefits of harmonisation

A harmonised reporting framework will:

  • Be immensely conducive to investment activity and the development of ESG investing at large, making accurate ESG information widely available to the market
  • Enable comparability, which is key to investment decisions
  • Allow companies to benchmark progress among their peers
  • Set the stage for global comparability
  • Facilitate sustainable financing and access to capital
  • Promote transparency in ESG management, supported by clear, quality disclosures
  • Prevent greenwashing and information asymmetry

Regardless of the outcome of harmonisation efforts, one thing is certain: the newly consolidated global framework will be data-driven, which is the principal factor underlying transparency across all the standards. The demand for accurate and investor-quality data will become more pronounced as ESG reporting develops.

The strength of a company’s reporting in a harmonised future hinges on two things: 1) the ability to understand and fulfil the new reporting criteria; 2) the ability to collect and disseminate relevant data. For most companies, the real challenge remains unchanged from the present – their reporting will only be as good as their data.

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How we help

  • We guide you to fulfil the criteria of the relevant standard through automated reporting.
  • We contact your stakeholders on your behalf and simplify the collection of relevant data internally and with external stakeholders including your supply chain.
  • We receive information from your stakeholders without jeopardising business-critical information, only showing one level up and one level down.
  • We facilitate data exchange with stakeholders and ensure that necessary and accurate information from the supply chain arrives with minimal effort.
  • We provide a centralised platform to manage all your data, pulling data from enterprise software such as ERP, HRM, EMS, etc.
  • We offer insights powered by data analytics, enhancing your understanding of your supply chain, ESG performance, and reporting strength.
  • We automate follow-ups to data sources, reminder emails and calculations and free up more time for you to do other things.


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