Author: Evgeniya Kyuchukova
The Omnibus package of reforms proposed by the European Commission has undoubtedly sparked debate and polarization—not only within the European Parliament but also among investors, businesses, and the public at large.
A clear direction has been set: reducing the number of companies required to publish full sustainability reports under the European Sustainability Reporting Standards (ESRS) and simplifying the reporting standards themselves. This raises an interesting question: how is sustainability reporting evolving outside the EU?
GRI
The Global Reporting Initiative (GRI) standards have been the most widely used sustainability reporting framework since the 1990s. Despite being voluntary, they were adopted by numerous multinational corporations long before any formal regulations or mandatory requirements were introduced.
Currently, the Global Sustainability Standards Board (GSSB) is working on several updates and expansions of existing standards, with a key focus on climate change, biodiversity, and human resources. So far, there is no indication of a significant simplification of these standards, raising the question of how they will compare to the future streamlined ESRS. This brings us back to the importance of interoperability and mutual compatibility, a point emphasized by the European Commission (EC), EFRAG, GSSB, and the International Sustainability Standards Board (ISSB) alike.
ISSB
The International Sustainability Standards (ISSB) are still evolving. Following the publication of Standards S1 and S2, the ISSB is working on updates and new projects focused on biodiversity, human capital, and the further development of SASB standards, which the ISSB standards reference.
At this point, there is no indication that the ISSB intends to simplify its standards, once again raising the question of comparability between the future, simplified European standards and the global ones. Notably, ISSB standards have already been officially adopted as the reporting baseline in 16 jurisdictions, including Australia, Turkey, Singapore, Brazil, and Nigeria, with another 14 countries in the process of adoption.
Other Standards
It’s also worth looking at what’s happening in some of the major Asian economies:
- In December 2024, China released a draft of its own sustainability reporting standards, which closely align with both ESRS and ISSB standards. These will gradually be rolled out to Chinese companies, with full implementation expected by 2030.
- Earlier this month, Japan’s Sustainability Standards Board (JSSB) introduced Japanese sustainability reporting standards, based on the ISSB framework.
- India is also making significant strides in sustainability reporting, with a growing number of companies adopting GRI, SASB, and TCFD standards. Currently, only the top 1,000 companies in India are required to report on sustainability, but this mandate is expected to expand by 2030.
What’s Happening in the U.S.?
At the federal level, the U.S. is leaning towards deregulation, but there is a clear divide between states based on their political stance. California, for instance, has taken bold steps toward adopting climate-related disclosure requirements.
Conclusion
The landscape of sustainability reporting is evolving rapidly, and it will be fascinating to watch how different regulators and standard-setting bodies work towards harmonization. The changes ahead will not only impact large corporations but will also have a ripple effect on smaller market players.