Audio: Navigating the ESG landscape

#ESGFrameworkComparison - Navigating Recent Shifts 🌱💼🔍

3 Key Takeaways:

• The scope and detail of ESG reporting requirements are expanding globally.
• Different jurisdictions have unique, yet overlapping, ESG disclosure frameworks.
• Proactive strategy and understanding of various ESG frameworks are crucial for compliance.

Further Insights:

Background Context

• A significant shift towards enhanced transparency in ESG reporting has emerged. This includes proposals from the EU, ISSB, and US SEC, which all introduced expansive sustainability disclosure requirements with their own unique scopes and details.

Comparative Analysis

• These global frameworks—CSRD in the EU, ISSB standards, and the SEC proposal in the US—while distinct, share the goal of improving ESG disclosure. Each emphasizes the importance of climate-related disclosures, albeit with varying scopes and specifics.

California Legislation

• With three California climate disclosure bills signed into law, the state accelerates the climate reporting timeline before the SEC rules are finalized. This move impacts over 10,000 companies, introducing stricter GHG emissions and climate risk disclosures.

Materiality and Targets

• Materiality assessments across these frameworks vary, with the EU considering double materiality (financial and impact) and others focusing on investor impact. Setting realistic, measurable ESG targets is also a shared theme, though approaches to achieving these targets differ.

GHG Emissions Reporting

• All frameworks require GHG emissions disclosure, emphasizing both scope 1 and scope 2 emissions. The methodologies and boundaries, however, vary, reflecting each framework's objectives and the jurisdiction's requirements.

Assurance Requirements

• Assurance on ESG disclosures, particularly GHG emissions, is becoming standard, with phased approaches varying from limited to reasonable assurance over time. This is pivotal for building investor confidence in reported ESG information.

Closing Thoughts:

With the landscape of ESG reporting requirements rapidly evolving and expanding in scope, how can companies stay ahead in implementing a comprehensive, flexible reporting strategy that aligns with multiple frameworks? Considering the drive towards global alignment on ESG standards, the strategic importance of not just complying but leveraging ESG reporting for strategic advantage is more critical than ever. How might discrepancies between frameworks impact global entities, and what steps can they take to prepare effectively for these changes?

#Sustainability #ClimateReporting #BusinessStrategy