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High-Level Overview of Sustainability Reporting Frameworks 

In the last few years, we have seen unprecedented change and landmark decisions made in the corporate sustainability reporting space – both in regulatory agendas and in the convergence of the plethora of voluntary standards known informally as the ever-confusing “alphabet soup.” Despite the rise in mandatory climate and emissions reporting, ESG reporting is set to become more straightforward for sustainability practitioners due to the standard-setting activities of late. The proliferation of new regulations and frameworks can be difficult for corporations and stakeholders to navigate. We outline the important ones to know in the sections below.  

With over 600 estimated sustainability reporting frameworks and regulations available worldwide, it is undeniably a major hurdle and efficiency problem for organizations trying to determine which set of standards will best suit their industry needs and stakeholders’ wants. Reporting schemas are made to standardize and provide guidance on 1) report content and 2) report/data quality. Detailed below are the most widely used and robust reporting tools as of 2024 that play a role in consolidated universal standards and regulatory measures. 

Mandatory Sustainability Reporting 

Companies must first consider whether they need to adhere to any mandatory reporting regulations within their industry and at scale (global, national, and local). This might include national compliance laws for reporting or local environmental reporting requirements and standards like green building codes or building performance standards. Disclosure regulations like the European Unions’ new CSRD and the U.S. SEC climate-related disclosure rules, mandate the disclosure of specific sustainability information, creating a level playing field for corporations and sectors within a jurisdiction and ensuring transparency and accountability when it comes to measuring, managing, and analyzing an organizations carbon footprint. 

U.S. SEC Climate Disclosure Rule

  • Themes: Climate Risk Reporting
  • Required for: SEC-registered domestic or foreign companies
  • Stakeholder audience: Regulators and Investors
  • Takes effect: Delayed

The US Securities and Exchange Commission finalized its long-anticipated rule on March 6, requiring thousands of publicly traded companies to disclose certain climate-related information. While the final rule titled The Enhancement and Standardization of Climate-Related Disclosures for Investors takes a much narrower approach than what the SEC proposed in 2022, it marks a significant change in the level of climate-related information publicly listed companies must disclose in the US. The rule requires companies to disclose details related to climate targets, plans for meeting those targets, their oversight and governance practices, and climate-related financial expenditures. Some larger companies will be required to disclose Scope 1 and Scope 2 greenhouse gas (GHG) emissions — or the emissions associated with their operations and with their purchased energy — but only if the companies deem those emissions to be material. 

California SB 253

  • Themes: Sustainability and Climate
  • Number of participants: The Assembly and Senate Floor Analyses estimate that SB 253 will cover 5,344 entities.
  • Required for: Under Bill 253, any company with greater than $1 billion in annual revenue and doing business in the state is obligated to comply and publicly file reports every year. This accounts for approximately 5500 companies.
  • Stakeholder audience: Regulators
  • Takes effect: Starting in 2026, subject companies will have to report scope 1 and scope 2 emissions from the prior fiscal year (data should be collected throughout the year in 2025).

California’s Corporate Data Accountability Act mandates that any company generating annual revenue of over $1 billion that does business in the state measure and publicly report Scope 1 and 2 greenhouse gas emissions starting in 2026 and begin disclosing Scope 3 emissions starting in 2027. It is important for covered entities, as well as those that may see extraterritorial effects of the ruling, to know that SB 253 sweeps more broadly in scope than the SEC proposal in some significant respects. 

EU CSRD

  • Themes: Sustainability and Environmental Reporting
  • Number of participants: 50,000+
  • Required for: EU companies with 250+ employees or that are publicly traded, plus large international companies doing business in the EU starting in 2028
  • Stakeholder audience: Regulators and other EU stakeholders
  • Takes effect: January 1, 2024

Under the European Union’s Corporate Sustainability Reporting Directive, all organizations listed in an EU-regulated market with 500 or more employees must start reporting in 2025 with data for the 2024 financial year. Other large companies will be required to do the same in subsequent years, followed by small and midsize enterprises, including organizations with subsidiaries in Europe. Under the ESRS, companies are required to disclose material environmental, social, and governance impacts and risks within their upstream and downstream value chains – for example, Scope 1, 2, and 3 emissions as well as total greenhouse gas emissions. 

Voluntary Reporting 

Choosing to report to or craft reports based on certain standards, frameworks, principles, and ranking institutions is voluntary- unless they get baked into regulations by certain countries or used to inform regulatory proposals. However, certain standards and frameworks may be quasi-mandated for some firms due to intense investor pressure or requirements from lending institutions. The most common and important voluntary reporting avenues include: 

Internal Sustainability Reports: Many companies choose to produce standalone sustainability reports that provide detailed information about climate-related risks, initiatives, and performance metrics. These reports are generally released on an annual basis at the discretion of the disclosing company. 

ISSB (International Sustainability Standards Board):

  • Themes: General Sustainability Accounting, Risks & Opportunities
  • Best For: Medium to Large Companies
  • Stakeholder audience: Investors, CFOs and Finance
  • Takes effect: January 1, 2025

Created with the intent to provide a unified global baseline of climate reporting standards, the ISSB published its first two final standards in June 2023: one on climate-related disclosure requirements (IFRS S2) and one on general disclosure requirements addressing governance and other sustainability matters (IFRS S1). While ISSB as a standard setter is not mandatory for individual firms to follow, individual jurisdictions and regulators are likely to adopt or otherwise use these standards in their rulemaking. Entities that plan to publish annual reports in 2025 using ISSB standards will want to track activities beginning in January 2024.

Alignment with other standards?

The ISSB is a consolidated framework, incorporating knowledge from prior standards including the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation (VRF). They encourage companies to continue to use the resources provided by these bodies, such as the Integrated Thinking Principles, the Integrated Reporting Framework and SASB Standards. ISSB has effectively taken over SASB, and is in the process of integrating SASB and CDP into the new ISSB reporting standards. GRI and TCFD complement and influence ISSB, and as of 2024, TCFD will be integrated fully into the ISSB standards.

CDP

  • Themes: Climate, Supply Chain, Forests, Water
  • Best For: Medium to Large Companies
  • Stakeholder audience: Investors, Supply chain

CDP (formerly known as the Carbon Disclosure Project) provides a platform for companies to disclose their environmental performance, including their greenhouse gas emissions, water management, and forest conservation, and is the most widely adopted voluntary sustainability reporting framework in the world. Over 23,000 companies worth over half of global market value report to CDP. Recently CDP has announced that, from 2024, it will incorporate the ISSB climate disclosure standard [S2] into its disclosure system. 

Link to 2024 Guidance and Questionnaires: https://www.cdp.net/en/guidance

TCFD

  • Themes: Climate, Supply Chain, Forests, Water
  • Best For: Medium to Large Companies
  • Stakeholder audience: Investors, Supply chain

The Task Force on Climate-Related Financial Disclosures (TCFD) is a foundational framework designed to help companies better understand and manage their climate-related risks in their financial filings, and to provide investors with more transparent and consistent information. However, the TCFD is now being replaced by ISSB standards. In January 2024, the Financial Stability Board — the body responsible for the formation of the TCFD — officially sunset the entity, passing the baton to ISSB. The ISSB will now carry on TCFD’s legacy in providing the primary framework for climate disclosure. 

GRI

  • Themes: General
  • Best For: Any type of organization
  • Stakeholder audience: All

GRI’s (Global Reporting Initiative) Sustainability Reporting Standards were the first and most widely used sustainability reporting framework created globally, helping organizations of all sizes and sectors communicate their ESG performance with a common and universally applicable reporting language. The newest GRI Standards provide three sets (economic, environmental, and social) of 34 topic-specific standards to help companies report on material ESG issues to their investors and other stakeholders. GRI has no central oversight function – but companies can choose to make their reports available via a database on the GRI website. GRI also informed the creation of IFRS 1 and 2, and is now a complementary resource.

GRESB (Global Real Estate Sustainability Benchmark)

  • Themes: Sustainability & Risk
  • Best For: Real Estate Companies
  • Stakeholder audience: Real Estate Portfolio Investors, managers, lenders, and clients

GRESB (formally known as; Global Real Estate Sustainability Benchmark) is a Sustainability reporting, rating, and ranking schema for real estate portfolios, infrastructure, and investors. It provides transparent and actionable data, setting the standard for listed property companies, private property funds, developers, and direct real estate investors. Evaluating performance across management, performance, and development, GRESB offers a comprehensive ESG rating, represented as a percentage with a maximum score of 100%.

SASB

  • Themes: Sustainability
  • Best For: All
  • Stakeholder audience: All

Sustainability Accounting Standards Board): SASB provides guidelines for investors on what financially material information companies should report, as well as frameworks that identify what ESG information (including climate-related information) is relevant to a subset of 77 industries 

Other Important Frameworks and Tools That Fit into the Reporting Ecosystem:

Greenhouse Gas (GHG) Protocol: the GHG Protocol (GHGP) was the first and remains the  most used and recognized carbon accounting framework. It provides guidelines for organizations to develop inventories for greenhouse gas (GHG) emissions. 

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