Global increase in sustainability reporting

What does sustainability reporting mean to you? A necessary evil or an opportunity for business development? Whatever you think, it’s here to stay. Not only at home and in the EU, but also globally, sustainability reporting is becoming the new normal. CSRD is more than just a reporting mechanism; it is a driver of change and essential for gaining investor confidence.

Author: Katarina Sivander

The Corporate Sustainability Reporting Directive (CSRD) is directly linked to the EU Green Deal and the EU Sustainable Growth Strategy. The aim is to create comparability and make companies more transparent when reporting their sustainability information. This in turn makes it easier for investors to make informed decisions when investing, and in the long run for consumers to choose products that support sustainable development.

But it is not only the EU that is introducing new sustainability reporting regulations. Investor interest in sustainable businesses is growing globally. Across the world, financial markets want to understand how companies are addressing issues such as climate change, diversity and supply chain risks as these can have a significant impact and pose sustainability risks to their business.

Exchanges and regulators are therefore developing regulations for sustainability and climate disclosure. According to the UN Sustainability Stock Exchanges database, ESG disclosure guidance is currently available on 71 exchanges, i.e. more than half of all exchanges in the world. In 2015, they were only 13. Mandatory ESG reporting currently exists in 38 markets, including 11 in the EU. In Sweden, as in many other European countries, the requirement is only introduced when the CSRD is incorporated into national legislation.

Another recent example is China, where the three major stock exchanges: Shanghai Stock Exchange, Shenzhen Stock Exchange and Beijing Stock Exchange (BSE), have recently published draft guidelines for sustainability reporting. These guidelines would require hundreds of large or dual-listed companies to report on ESG according to a range of criteria starting in 2026. In doing so, China joins other global markets that are introducing more stringent sustainability reporting standards, including CSRD in the EU and SEC climate disclosure in the US.

The ongoing harmonization of sustainability disclosure standards will create reliable and comparable ESG data, which is increasingly important for attracting capital and investors and preventing greenwashing globally. CSRD is emerging as a crucial tool to ensure a sustainable future.

Current initiatives are the result of a multi-year process. The illustration shows key milestones for the harmonization of sustainability reporting. (Source: IFC, International Finance Corporation)

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