Corporate sustainability disclosure aims to bring greater transparency to the impact organizations have on society and the environment. Consumers, investors, and governments around the world want to see evidence that companies are making tangible efforts to improve the sustainability of their operations and outcomes.
Corporate sustainability disclosure, also referred to as corporate sustainability reporting, is intended to reveal this evidence, or the lack thereof. But it’s not as straightforward as it sounds. Even as the world works toward shared Sustainable Development Goals rooted in The Paris Agreement, different regulators establish different disclosure requirements and timelines based on what they feel is necessary and reasonable. This lack of standardization makes navigating corporate sustainability disclosure more difficult—for enterprises, investors, and the public.
In this guide, we’ll cover everything you need to know about corporate sustainability disclosure, including:
- Who is required to produce sustainability disclosures
- What corporate sustainability disclosures typically include
- Challenges with sustainability disclosure
- The future of sustainability disclosure and reporting
Let’s start by discussing who disclosure requirements apply to.
Who is required to produce sustainability disclosures?
Most regulating bodies are under pressure from investors, the public, and/or politicians to establish and enforce sustainability disclosure requirements, if they haven’t done so already. Still, most countries and jurisdictions don’t currently require organizations to disclose sustainability data.
And that can make it difficult, particularly for employers distributed across multiple jurisdictions, to determine what disclosures they may be required to produce—and what to voluntarily disclose elsewhere.
Global standards for sustainability disclosure
Despite the UN’s efforts to advance progress toward a global standard and the shared global commitment to The Paris Agreement, most countries still aren’t enforcing sustainability standards.
That’s not to say global standards don’t exist, as the International Sustainability Standards Board (ISSB) defined its guidelines for General Sustainability-related Disclosures in 2023. But as of December 2024, just 13 jurisdictions had adopted these guidelines on a mandatory or voluntary basis, with 22 additional jurisdictions planning to adopt them soon. An additional 80 jurisdictions have adopted older standards defined by the Sustainability Accounting Standards Boards (SASB), which the ISSB standards are based on.
US sustainability disclosure requirements
In the US, the SEC has dropped its efforts to define a federal standard for sustainability reporting, leaving the matter to individual states—with an exception. The SEC has historically required companies to disclose sustainability-related information that would be considered “material” to investors, meaning it would likely impact investment decisions.
This is a bit contradictory, since many investors have long argued that sustainability reporting is necessary because it is a significant area of risk which businesses need to manage, particularly for long-term gains. The now defunct SEC climate disclosure rule would have clarified more precisely what would be considered material, though it’s possible the current administration may consider all sustainability matters immaterial in the near future. Prior to becoming chair of the SEC, current chair Paul Atkins critiqued that the requirements had overstepped by requiring “vast quantities of immaterial information,” and prior to Atkins’ confirmation, SEC acting chairman Mark T. Uyeda characterized the SEC requirements as “unnecessarily intrusive climate change disclosure rules.”
For now, companies may still need to disclose sustainability-related information that directly affects their bottom line—such as major investments in more sustainable equipment or materials—but the current SEC will likely be more lenient. And in that case, companies that operate in the US will need to understand the requirements of each state they operate in.
As of April 2025, there are only six states with their own sustainability disclosure requirements: California, New York, Colorado, New Jersey, Washington, and Illinois. Each of these states are in different stages of developing, implementing, and enforcing these regulations, and while they will likely all be similar, companies that operate in multiple states will need to pay careful attention to the variations.
EU corporate sustainability disclosure requirements
For companies that operate in the EU, there are a couple of other major disclosure requirements to be familiar with:
- Corporate Sustainability Reporting Directive (CSRD) defines sustainability disclosure requirements for financial reporting based on the European Sustainability Reporting Standards (ESRS).
- Corporate Sustainability Due Diligence Directive (CSDDD) is a sustainability reporting guideline with the additional requirement for companies to disclose how they’re actually addressing their human rights and environmental impacts.
Each of these requirements were postponed in part by the Stop the Clock Directive in 2025, but over the next couple years, compliance will be required for all applicable companies in the EU.
Mandatory vs. voluntary sustainability disclosure
Even when companies aren’t required to disclose sustainability information, it may still be in their best interest to do so. Investors use corporate sustainability to compare the risks and benefits of potential investment opportunities. Companies that operate sustainably appear better positioned for long-term growth and addressing uncertainty.
There’s a very real financial incentive to present evidence that your organization is sustainable. And if you can do that by voluntarily following an established sustainability framework and adhering to trusted guidelines, it’s easier for investors to compare your organization to others.
While mandatory sustainability reporting is slowly gaining traction around the world, voluntary reporting is far more common, and companies that make voluntary disclosures now will be at an advantage when those disclosures eventually become mandatory.
What do corporate sustainability disclosures include?
Sustainability reporting encompasses three core areas: environmental, social, and governance (ESG). A corporate sustainability disclosure includes both quantitative and qualitative data relating to how a company manages the risks and opportunities in each of these areas, and demonstrates progress toward any public claims or sustainability goals.
Companies in jurisdictions with mandatory disclosure requirements need to build their reports around these regulations. But beyond this, businesses have quite a bit of flexibility to select the frameworks they use, the standards they follow, the optional content they include, and what to omit. But whatever is included, stakeholders want to see clear rationale for why the content is relevant and significant.
In general, sustainability frameworks help organizations determine how to structure disclosures, while sustainability standards define what metrics to include. While there are multiple frameworks and standards that vary in scope (some focus more narrowly on financial impact or environmental data), many are converging, and they tend to cover the same or similar types of information. Guidelines and best practices also vary by industry—a company that produces products in a factory will have different reporting needs than a software company or healthcare provider, for example.
The key to determining what belongs in a sustainability disclosure is “materiality”—the information’s relevance to an organization’s value and an investors’ decision to invest. But different investor groups and regulators may have very different interpretations of what should be considered material, and without a shared standard, companies may be left to define materiality for themselves. But whether you’re following a standard or not, a sustainability materiality assessment is often an important part of the disclosure process.
We’ll cover some of the main subtopics of a corporate sustainability disclosure here, but the specific standard and/or framework you use will determine the specifics of your reports.
Environmental information
Environmental metrics are arguably the most crucial and difficult component of corporate sustainability disclosures. Here, companies demonstrate the measurable impact their business has on the environment through concrete metrics and meaningful actions including initiatives and goals.
Scope 1, 2, and 3 carbon emissions
Scope 1, 2, and 3 emissions are often at the center of arguments about climate disclosure requirements, because the data (particularly for Scope 3) can be especially difficult to obtain. But greenhouse gas (GHG) emissions are also one of the strongest reflections of an organization’s impact on the environment and contribution to climate change.
Scope 1 emissions are the carbon emissions directly generated by activities like fuel consumption and industrial processes. Scope 2 emissions are produced indirectly through the use of electricity, steam, heating, and cooling. Scope 3 emissions are produced indirectly through the business’s value chain, including their suppliers, distributors, and customers. With each scope, the main challenge is data collection, but specialized carbon accounting solutions like Tango Energy & Sustainability can streamline the process, standardize your data, and automatically calculate your emissions.
Water and energy management
Corporate sustainability disclosures should report on how a company uses natural resources like water, electricity, and gas, as well as any steps they’ve taken or goals they’ve established to decrease their consumption. This should include any investments they’ve made in renewable energy, more efficient equipment and assets, or technology that helps them manage resource consumption more effectively.
Waste management
Manufacturers and other industrial businesses need to disclose their waste management practices and report on the amount and types of waste their operations produce. This includes processes like carbon capture and storage, as well as any efforts the company makes to reuse and recycle waste materials.
Social information
The social component of a sustainability report explores an organization’s impact on the communities it operates within and society as a whole. Your disclosure should share pertinent information about your employees, customers, community, and culture.
Diversity, equity, and inclusion
Investors have long argued that diversity is an important driver of long-term value and profitability that helps enterprises compete on the global field. Diverse workforces are better positioned to serve diverse customer bases. And by being equitable and inclusive, companies can build, attract, and retain the most competent talent.
In a sustainability report, investors want to see an organization’s employee population divided by race, gender, role, and pay, as well as any commitments the business has made to DEI and steps they’ve taken to make their workplaces more inclusive.
Community relations
Investors, regulators, and the public want to see that a business is having a positive impact on the communities it serves and/or operates within. This can encompass information like charitable contributions, community events, employee service, and education opportunities.
Governance information
Sustainable leadership qualities demonstrate the steps an organization has taken to mitigate the short- and long-term risks associated with poor business ethics and ensure that there are guardrails in place to keep the company heading in a positive direction.
Business ethics
Healthy company cultures don’t form by accident—they’re built by policies, training, and constant reinforcement from company leadership. Employees observe the conduct that is modeled, rewarded, and disciplined, and that influences how they treat each other, their work, and their customers.
Sustainable organizations clearly communicate their values and expected behavior to employees, and they regularly train employees on topics like anti-discrimination and harassment. When problematic behaviors occur, they take responsibility and follow appropriate accountability practices.
Investors will have their own processes and priorities for vetting a company’s ethics, but businesses should aim to communicate (and where possible demonstrate) their commitment to ethical labor practices and employee wellbeing.
Data security
Data security represents a significant risk factor for any company that collects and stores customer data, and how an organization handles this responsibility reflects on its leadership and ethics. Investors want to see certifications, compliance, audits, and other clear signals that an organization is serious about protecting their customer data and staying on top of advances in cybersecurity.
Leadership structure
It’s hard for an organization to prioritize sustainability if it isn’t reflected within the company’s top leadership roles. Businesses that want to demonstrate their commitment to sustainability need dedicated positions that can focus on creating, promoting, and integrating sustainability initiatives, with the authority to drive organizational change. A sustainability report should articulate how the company’s leadership structure supports and enhances its ability to operate sustainably.
Challenges with corporate sustainability disclosure
Much of the resistance to requiring sustainability disclosures has centered on the difficulty this type of reporting poses to businesses. A sustainability report is a massive undertaking that could involve dozens or even hundreds of stakeholders from numerous departments, and typically requires the development or adoption of new tools and processes.
Here are some of the greatest challenges with producing corporate sustainability disclosures.
Legal risks
Whether a corporate sustainability disclosure is mandatory or voluntary, any claim an organization makes about its commitment to sustainability must be supported by data, or they can face “greenwashing” lawsuits from investors, consumers, or regulators. In a 2024 EY study, 85% of investors felt like greenwashing was a greater problem than it had been five years ago, and 55% of finance leaders felt that sustainability reports in their industry risked being perceived as greenwashing.
The legal risks of climate disclosure are particularly challenging when companies set sustainability goals and specific targets for achieving net-zero emissions or decarbonization. If you don’t make enough progress toward these long-term goals, it may appear as though the goal itself was simply an attempt to appear sustainable to secure funding or favor.
At the same time, sustainability targets are set based on projections that include assumptions about the availability of sustainable materials and technologies—and these can easily prove wrong in the future. Some airlines, for example, have had to walk back their sustainability targets due to circumstances like the availability of sustainable aviation fuel (SAF), which hasn’t been able to meet demand, making it several times more expensive than fossil fuels.
The potential for legal trouble adds a significant layer of complexity to disclosures as companies attempt to balance future uncertainties and achievable commitments.
Sustainability data collection
Compiling sustainability data can be a painstaking process. While some datasets, like employee demographics, may be readily available, others have to be assembled from many different sources. An enterprise with hundreds or thousands of locations may have just as many distinct utility providers, each with their own billing formats and varying levels of transparency. In order to calculate emissions, organizations have to collect, organize, and standardize this data.
This is one of the key problems Tango Energy & Sustainability solves. It integrates with your utility providers to automatically intake your energy bills, reformat them using a single standard, and consolidate them into a convenient dashboard for you to analyze.
Data accuracy
Investors and regulators often require an organization’s sustainability data to be audited by an approved third party to ensure its validity. These audits are costly, and the more data, the more resources they take. And unfortunately, when you have dozens, hundreds, or thousands of utility providers, your data is bound to be rife with errors.
Manual processes (like copying data to spreadsheets) can exacerbate this problem by introducing human error. Advanced energy management solutions like Tango Energy & Sustainability can help by not only automating data collection, but by auditing your data for common errors like duplicate bills and gaps in billing periods. This can dramatically reduce the time needed for audits by flagging errors in advance.
Lack of standardization
According to McKinsey, investors and executives alike want fewer sustainability standards, with more than half of each group agreeing that there should only be one standard. The widespread use of multiple reporting standards makes it more difficult for investors to compare risks and opportunities, and harder for companies to decide what standard makes the most sense for their circumstances.
Sustainability standards are already in the process of converging to address this problem. After the formation of the ISSB and the creation of its standards based on the Task Force for Climate-related Disclosure (TCFD) and SASB, the Financial Stability Board disbanded the TCFD to support the ISSB. Considering that there are numerous standards based on the TCFD, we can expect more regulating bodies to follow suit in the future.
The future of corporate sustainability disclosures
Around the world, mandatory sustainability disclosure has struggled to gain traction, with political shifts in the EU and US halting or undoing progress. At the same time, the clear financial incentive for disclosures remains, and as investors continue to use sustainability reporting to compare investments, voluntary reporting will likely continue to grow.
Many of the strongest barriers to disclosure mandates are rooted in the difficulty of implementing new financial reporting processes that incorporate quantitative and qualitative data, and the lack of clarity around what is considered material to these reports. But as standards continue to converge and purpose-built technology sees greater adoption, much of this friction will subside.
And of course, sustainability disclosures aren’t merely a financial matter. As the critical dates of The Paris Agreement (2025, 2030, 2050) loom closer (or have already arrived), advocacy groups and regulators around the world will only increase pressure to meet these shared commitments. Even as the US changes course federally by backing out of the agreement and ending its federal disclosure rule, states will continue looking for ways to implement their own disclosure requirements.
Right now, organizations should see voluntary disclosure as an opportunity to get ahead of the curve, refining their ability to incorporate sustainability data into their financial statements before they’re required to do so.
Simplify corporate sustainability disclosure with Tango
For many organizations, data represents the biggest hurdle with sustainability reporting. They lack the tools to efficiently collect, organize, standardize, audit, and present their quantitative sustainability data. The larger your operations, the more disparate data sources you have, and the more difficult the entire process becomes.
Tango Energy & Sustainability Management makes reporting easy by automating sustainability data collection, standardizing your data, auditing it for common errors, and formatting it according to your preferred reporting framework. If you operate in territories that use different frameworks, it’s just as simple to produce multiple reports.
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