Global ESG Reporting Standards Coming in 2024

Someone showing another person esg reports.

For people following recent developments in ESG reporting and disclosure, February was a hot time to be in Montreal with the International Sustainability Standards Board (ISSB) agreeing to launch the drafting and formal balloting process for the inaugural IFRS Sustainability Disclosure Standards.

Despite the below-freezing temperatures outside, the International Financial Reporting Standards Foundation met in North America’s most European city for its first Sustainability Symposium, a convening of “global businesses, investors and policymakers to discuss progress toward a global baseline of sustainability disclosures to inform investment decisions.”

Conference attendees had a front row seat as ISSB unanimously approved entering the drafting and formal balloting process for developing harmonized global sustainability and climate disclosure standards.

These new reporting and disclosure standards, which will be effective as of January 2024, are expected to be published by the end of Q2 2023.

In underscoring the strong demand from investors for companies to disclose comprehensive and comparable sustainability information globally, ISSB Chair Emmanuel Faber remarked, “We responded to capital market and G20 demand for common language of investor focused sustainability-related disclosure, working diligently to deliver standards that fulfil the global baseline. Now, we will work with regulators around the world as they play their part, creating the conditions within markets for adoption, so that investors can use comparable information about sustainability-related risks and opportunities in their investment decisions without delay.”

IFRS/ISSB Takes the Lead

We celebrate this coordinated international approach to developing and aligning ESG reporting standards that include climate, sustainability, human capital, and other hot-button social and environmental issues. It is clear that IFRS/ISSB is quickly becoming the gold standard for harmonizing ESG standards globally, and we are hopeful these standards will create more clarity for how small- to medium-sized enterprises (SMEs) can respond to future disclosure requests.

This step represents the maturation of global sustainability standards, and in our opinion, provides a clear opportunity for companies to begin aligning a standardized set of industry-specific sustainability-related metrics, targets, and key performance indicators (KPIs) with bottom-line financial performance.

What’s the Future for ESG Regulation?

It is worth mentioning that ESG reporting is completely voluntary at present for SMEs, but we expect more pressure from key stakeholders (customers, financiers and regulators) in the near future to disclose this information in a standardized fashion.

Last month’s announcement from ISSB is further evidence there will likely be a regulatory requirement at some point, so now is a good time for SMEs to start getting their ESG house in order.

The U.S. SEC, for example, is expected to make a similar announcement on climate change-related disclosures for publicly traded companies by the end of April. We expect that this will trickle down to SMEs who sell to large public companies within the next couple years as the demand for more Scope 3 emissions data gets pushed down the supply chain.

It remains to be seen how this disclosure language will be worded, and who will be affected most acutely, so we will continue to monitor for updates.

ESG Disclosures – What You Need to Know Now, and How You Can Prepare

While ESG disclosures are currently voluntary for most companies, now is a good time to take a comprehensive look at your organizational footprint. An ESG Assessment can help you benchmark your current initiatives and understand what types of disclosure information your customers or creditors will be looking for in the near future.

It can also serve as the foundation for a broader ESG strategy in preparation for taking future action on environmental and social initiatives in alignment with your broader business strategy.

SSF offers several resources to help you align your ESG initiatives, and the related disclosures, with your broader business strategy. We are a Platinum deployment partner of the Impakt IQ (IIQ) ESG intelligence platform. The IIQ assessment provides an investor-grade ESG framework for each client based on industry and sector, which allows them to identify, assess, and manage all material ESG issues that pose a risk or value creation opportunity to their business.

We also offer a complimentary ESG Readiness Assessment to help companies begin to take meaningful first steps on their respective ESG journeys. During a short consultation, we’ll gather information about your current situation and goals, and provide an overview of the relevant global frameworks for your industry. We’ll provide insights into your industry’s primary ESG considerations, the factors driving your ESG risks, and an overview of the business case for investing in a more comprehensive ESG Assessment like Impakt IQ.

Get to Know Us

Interested in getting started? Contact us to learn more about the next steps in your ESG journey.