Need to know: Sustainability reporting standards & frameworks

The field of sustainability reporting is constantly evolving. But even as the latest disclosure rules shift in real-time, it’s crucial for today’s businesses to understand the basics.

This fast-growing area of focus, often central to a company’s CS (corporate sustainability), CSR (corporate social responsibility) or ESG (environmental, social, governance) work, is held together by a variety of voluntary standards and frameworks. These regulations are meant to ensure that the sustainability data provided by companies, countries, or municipalities is comprehensive, structured, and comparable. 

With such a wide variety of reporting options — often referred to as “alphabet soup” due to the number of acronyms involved — that comparability has gotten lost. To address this, many reporting organizations are making efforts to consolidate.

Leading the consolidation effort

One notable example of this consolidation effort is the ISSB, or International Sustainability Standards Board. Formed by the IFRS (International Financial Reporting Standards) Foundation in November 2021, the ISSB is developing a new set of standards that will serve as a new global baseline of sustainability disclosures.

“Recognizing the value of existing frameworks and the market demand for streamlining,” the ISSB has been tasked with building on the work of  — prepare yourself, acronyms incoming — the SASB, TCFD, CDSB, and others.

Whew. Did you get all that? Amidst these shifts and changes, understanding the most popular standards and their origins will allow you to report accurately into the current systems — and prepare for the streamlined reporting of the future.

Four reporting standards to know

• Global Reporting Initiative (GRI): The most comprehensive and widely accepted form of sustainability reporting today is the GRI. Its framework enables businesses, governments, and other organizations to understand and communicate their environmental, social, and governance impacts through a customizable format based on a company’s material topics. By adhering to the GRI framework, organizations can disclose their sustainability performance in a structured and transparent manner, helping stakeholders make informed decisions. They’ve committed to working with the ISSB on mapping the standards together.
• SASB Standards: Now best viewed as a “pathway to ISSB disclosure,” the SASB provides industry-specific standards for companies to disclose financially material sustainability information. With over 70 industry-specific standards, SASB can help companies enhance transparency and provide investors with a comprehensive understanding of their performance and potential risks and opportunities related to sustainability factors.
• Task Force on Climate-Related Financial Disclosures (TCFD): As of the recent United Nations Climate Change Conference, this task force has officially “fulfilled its remit” and disbanded. That said, the core components of the TCFD still inform almost all major structures being created for future reporting. TCFD alignment helps investors and other stakeholders understand how climate-related risks and opportunities might impact a company's financial performance over the short, medium, and long term. 

These are examples of current, voluntary disclosures, but this type of reporting is quickly becoming mandatory. 

On an international scale, the EU-based CSRD (Corporate Sustainability Reporting Directive) will soon require more than 50,000 companies — including at least 10,000 companies outside the EU — to report. In the US, the SEC has proposed a climate disclosure rule that would increase corporate transparency related to climate risk for investors as it mandates public companies to disclose climate-related financial risks and strategies. Additionally, California has passed SB 261 and SB 253, mandating that starting in 2026, companies will need to publicly disclose climate-related financial risks (in accordance with TCFD) and reduction/adaptation measures, along with required reporting of scopes 1, 2, and 3 emissions. 

It’s all a lot to keep track of, but it’s critical for today’s businesses to understand. As these standards and frameworks become consolidated and mandatory, businesses must be prepared not only to report, but to ensure their reported data is audit-ready.