The Evolving Landscape of Sustainability Reporting

As the world grapples with issues related to sustainability, there has been a shift from voluntary reporting to mandatory disclosures. With the economy being at a critical point, businesses need to reassess their supply and value chains. 

Global reporting frameworks

The Corporate Sustainability Reporting Directive (CSRD) from the EU mandates companies to publicly declare their Environmental, social and governance (ESG) impacts. The goal is to allow transparency that will help investors, analysts, consumers and other stakeholders better evaluate EU companies’ sustainability performance. 

The International Sustainability Standards Board (ISSB) formed at COP26, also issues its inaugural IFRS Sustainability Disclosure Standards, designed to be the global baseline of sustainability related disclosures focused on the needs of investors and financial markets. 

The GRI standards provide global standards for sustainability impacts by enabling any organization ‘to understand and report their impacts on the economy, environment and people in a comparable and credible way.’

Other than these, countries across the globe are also increasing emphasis on due diligence. Laws in South Korea, Brazil and Australia also require businesses to identify and manage impacts on human rights and environment.  

Sustainability reporting in India 

In India, the Securities and Exchange Board of India (SEBI) mandates businesses to disclose sustainability- related metrics in their Business Responsibility and Sustainability Reporting (BRSR). This mandatory reporting has made ESG consider strategic priorities in business discussions. The BRSR has taken references from many global standards such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-Related Financial Disclosures (TCFD). 

In order to strengthen India’s ESG ecosystem, the Indian Institute of Corporate Affairs (IICA), under the aegis of Ministry of Corporate Affairs (MCA) has also initiated the IICA Certified ESG Professional – Impact Leader Programme. This initiative will help build ESG leaders and regulatory expertise, allowing for better business conduct and reporting. 

Challenges to sustainability reporting

Better governance is required as there needs to be a clear definition with institutions about the processes and ways in which companies are monitoring, managing and evaluating their sustainability and climate related practices. As these disclosures might highlight some risks for businesses, the companies must also be adept in risk management and creating opportunities from these shortfalls. According to a report by PwC, insufficient ownership and accountability at the business level, inconsistent data entry, absence of SOPs for data collection and lack of clear communication are also major people and process challenges when it comes to reporting. 

However, despite these challenges, sustainability reporting has seen a major push in the past few years. According to KPMG’s Survey of Sustainability Reporting 2024, many companies are conducting double materiality assessments and aligning voluntary reporting, instead of waiting for legal mandates. According to their research, 96% of the world’s largest 250 companies and 79% of the top 100 companies in each country report on sustainability. Furthermore, all the top 100 companies in Japan, Malaysia, Singapore, South Africa, South Korea and the US report on sustainability. Three quarters of G250 companies also report on climate-related risks, in line with the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations. 

With proper guidelines from the Government and companies taking ownership of these reporting, businesses can make ESG reporting a part of their short-term and long-term business objectives. A robust sustainability reporting not only helps businesses measure progress, but also drive more value while mobilising capital and support developmental needs of our society.