Last updated: 09.06.2023
Understanding Sustainability Disclosure Frameworks and Standards

Pathway to Sustainability Disclosure Going Mainstream

There is growing investor interest in companies engaged in sustainable business activities. Investors want to understand how companies tackle issues such as climate change, gender diversity, or supply chain risks that may have a material impact on their business.

Stock exchanges and regulators develop sustainability and climate disclosure regulations. Currently, 71 - more than half of stock exchanges worldwide have guidance on ESG disclosure; in 2015, it was only 13. Mandatory rules are in 27 markets, of which 16 are emerging markets, accordion to the UN Sustainability Stock Exchanges database.

Harmonizing sustainability disclosure standards will create reliable and comparable ESG data and disclosures, which is increasingly critical to attract capital and investors and prevent greenwashing.
A welcoming step in the convergence of different standards and frameworks are the new sustainability and climate-reporting standards by the IFRS Foundation and the European Sustainability Reporting Standards.
IFRS Sustainability Disclosure standards are due to be finalized in June 2023 and ‘take effect’ from January 2024, and the European Sustainability Reporting Standards should be launched in July 2023, effective as of January 2024.

The diagram below presents the key milestone in sustainability disclosure going mainstream over the last 20 years.

key milestone in sustainability disclosure
 

Comparison of Main Disclosure Frameworks and Standards

The table below provides a summary comparison of the major sustainability frameworks and standards, including:

The comparison focuses on the type of instrument and whether it is voluntary or mandatory, its geographic coverage, the topics addressed and definition of materiality. 

Comparison of Main Disclosure Frameworks and Standards.png.png

Comparing US Securities and Exchange Commission (SEC), European Sustainability Reporting Standards (ESRS), and International Sustainability Standards Board (ISSB) Proposals on Climate Disclosures

Source: WB and IFC, 2023, and The Evolution of Sustainability Disclosure: Comparing the 2022 SEC, ESRS, and ISSB Proposals
Source: WB and IFC, 2023, and The Evolution of Sustainability Disclosure: Comparing the 2022 SEC, ESRS, and ISSB Proposals

Note: CSRD = Corporate Sustainability Reporting Directive; EFRAG = European Financial Reporting Advisory Group; ESG = Environmental, Social, and Governance; ESRS = European Sustainability Reporting Standards; EU = European Union; FY = Fiscal Year; ISSB = International Sustainability Standards Board; SEC = Security and Exchange Commission.

Comparison studies used for the climate disclosure comparison table:
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