A PDF version of this publication is attached here: ESG reporting: Preparing for tomorrow's rules today (PDF 159kb)

Regulators and standard setters around the world have proposed new disclosure requirements triggered by investor demand and, in some cases, designed to inspire efforts to combat climate change. The ESG reporting landscape is dominated by the “big three” proposals released this year: in the European Union (EU) as part of the Corporate Sustainability Reporting Directive (CSRD), internationally by the International Sustainability Standards Board (ISSB), and in the United States by the Securities and Exchange Commission (SEC). Nearly all public companies are expected to be subject to one or more of these rules, and some may be impacted by all three. Private companies are also likely to need to report in some form whether to investors with enhanced expectations, companies in their value chain, or perhaps mandatorily in jurisdictions like the EU. With final guidance around the corner, the big question is — what should companies be doing now?

The rules and standards are not yet final and the proposed requirements are expected to evolve as a result of the rule-making and standard setting process. Companies could take the approach of waiting until the uncertain is certain. But given the expected scope of the requirements, and effective dates that could be less than a year from issuance of the final rules and standards, that option is simply not feasible. This publication offers “no regrets” moves to prepare for new climate disclosures. Think of these actions as a head start: many of the steps to successful compliance can be started now to avoid a scramble when the rules and standards are finalized.

The topics in scope and specific requirements of the three proposals differ. The current SEC proposal is more narrowly focused on climate-related risks and opportunities, while the draft EU Sustainability Reporting Standards (ESRS) — which will formalize the reporting requirements of the CSRD — and draft ISSB standards address a broader population of sustainability issues. This publication focuses on the topic of climate common to all three proposals but the concepts it covers are broadly applicable.