Reporting Standards & Methodologies 

European Sustainability Reporting Standards (ESRS) are a requirement for larger, listed EU companies that fall within the scope of the EU Corporate Sustainability Reporting Directive (CSRD). Two overarching standards (ESRS 1 and ESRS 2) provide the framework and set out the parameters and requirements for a company’s disclosures. In addition, there are a variety of other standards covering Environment, Social and Governance issues, some of which are mandatory and some of which are informed by a double materiality assessment that company’s must carry out as part of regulatory requirements.

In the EU, EFRAG is responsible for providing technical support to the Commission on the development of reporting standards and guidance. EFRAG is currently developing a set of sector-specific standards, including road transportation and motor vehicles.

IFRS Sustainability Disclosure Standards (S1 & S2) have been developed by the International Sustainability Standards Board (ISSB) to ensure financial investors receive decision-useful, globally comparable sustainability-related disclosures that meet their information needs.

IFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information – prescribes how an entity prepares and reports its sustainability-related financial disclosures. IFRS S2 – Climate-related Disclosures – sets out the requirements for disclosing information specifically about climate-related risks and opportunities. Both standards require the disclosure of information related to cash flows, access to finance and cost of capital. Many jurisdictions, including the UK, are working towards the adoption of these IFRS standards and their integration into financial reporting requirements.

While the EU has developed its own sustainability reporting standards (ESRS) to underpin its CSRD requirements, the ISSB and the European Commission have worked together during the development of both sets of standards to achieve a high degree of alignment.

UK Government is seeking to adopt IFRS S1 and S2 as part of its ongoing work to create UK Sustainability Reporting Standards (UK SRS).

The Global Reporting Initiative (GRI) is an independent not-for-profit organization that has developed a consistent, comparable and globally-applicable set of sustainability reporting standards that have become the world’s most widely-used. The GRI Standards are trusted by thousands of organizations around the world, providing the building blocks for transparent reporting, and helping them to manage risks and opportunities and support strategic decision-making. GRI are in the process of developing tailored standards for 40 sectors – which will include automotive manufacturing, trucking, transport infrastructure, and logistics.

GRI pre-dated many of the regulatory financial reporting requirements that have since come into force in various jurisdictions. And while GRI standards are designed to provide information to a broad range of stakeholders, other standards – in particular IFRS – are targeted towards the information needs of financial stakeholders. Therefore, GRI are working with the IFRS Foundation to optimise how both sets of standards can be used together to deliver full interoperability. This collaboration seeks to provide a seamless, global and comprehensive sustainability reporting system for companies looking to meet the information needs of both investors and a broader range of stakeholders.