Board Priorities 2024: ESG reporting
11 January 2024
Sustainability Reporting has become ever more complex for companies with new legislation requiring detailed information on environmental, social and governance (so-called ESG) aspects and the scrutiny of ESG-related commitments becoming a focus for regulators and investors alike.
Companies covered by the EU Non-Financial Reporting Directive (NFRD) now have to include additional information required by the EU Taxonomy Regulation, which has recently come into force. Reporting requirements will be further extended as soon as the provisions of the EU Directive on Corporate Sustainability Reporting (CSRD) will be implemented into national laws. CSRD and its accompanying Delegated Regulations do not only provide for more contents to be included in non-financial reports, but also materially extend the number of companies required to produce regular non-financial reporting.
The International Sustainability Standards Board (ISSB) climate-related disclosure standards IFRS S1 and IFRS S2, released in 2023, have set standardised expectations for mandatory climate-related financial disclosure reporting, with many jurisdictions looking to implement these, on a phased basis, from as early as 2024.
Boards will have to ensure that both their non-financial and financial reporting is robust as it relates to ESG and produces information, which is reliable, compliant and defendable in the public eye. Reports of regulated and large public companies will likely be thoroughly analysed by investors, regulators and the wider public not only for completeness in light of the statutory requirements, but also whether they correctly reflect the company's efforts and impact in relation to ESG.
To ensure that those reports are accurate without inviting allegations of greenwashing has to be a priority for any Board.
