A PDF version of the full chapter is attached here: Chapter 2: Scope
In response to increasing demand from investors, regulators, governments and other stakeholders to understand corporate actions taken to address climate change and other sustainability initiatives, various frameworks to transform sustainability reporting have emerged worldwide. The sustainability reporting frameworks expected to have the broadest impact are:
  • the Corporate Sustainability Reporting Directive (CSRD) in the European Union (EU),
  • the IFRS® Sustainability Disclosure Standards issued by the International Sustainability Standards Board (ISSB) and
  • the United States (US) Securities and Exchange Commission (SEC) proposed climate disclosure rules in the US.

In addition, California has issued several laws that will require sustainability disclosures from a broad range of public and private companies, including US subsidiaries of non-US entities.
Given the geographic reach of these frameworks and their potential to encompass a broad spectrum of value chain contributors, most entities are expected to be impacted in some way. In addition to entities in scope of one or more of the new rules, entities without direct reporting obligations may be asked for information by customers, suppliers, investors or lenders because of value chain disclosure requirements for in-scope entities. In addition, many multinationals will be subject to more than one framework. An SEC registrant that has a subsidiary listed in the EU and a subsidiary in a jurisdiction that requires disclosure in accordance with the IFRS Sustainability Disclosure Standards, for example, may be subject to all three frameworks, plus the new California laws.
There may be opportunities to leverage disclosures prepared for one reporting framework to satisfy some or all of the requirements of another. The European Commission (EC), EFRAG (previously known as the European Financial Reporting Advisory Group) and the ISSB, for example, have announced they are working together on interoperability guidance intended to assist companies that apply both the European Sustainability Reporting Standards (ESRS) and IFRS Sustainability Disclosure Standards. EFRAG has also announced that the ESRS reflect a “high degree of interoperability” with the standards of the Global Reporting Institute (GRI). In addition, two of the new California climate disclosure laws allow a company to satisfy their reporting requirements by leveraging disclosures prepared to meet other national and international reporting requirements, although this equivalency is provided only if those reports meet the requirements of the applicable laws.
Understanding where the frameworks align and diverge will help entities in scope of multiple frameworks develop the requisite reporting strategy, data gathering processes and related controls, providing for a streamlined process and effective deployment of resources to meet each framework’s individual reporting requirements.
See SRG 3, General requirements [coming soon], for further discussion of interoperability and equivalence considerations in complying with multiple reporting requirements.
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