Sustainability reporting: From compliance burden to strategic advantage
19 January 2026
Sustainability reporting has moved beyond a technical disclosure exercise – the need to manage often competing strategic priorities can mean significant Board focus is needed. Globally, regulatory frameworks are converging and diverging, investor expectations are often polarised, and the narrative you set will shape public perceptions of resilience and long-term value. Boards cannot afford to treat this as a backward-looking compliance tick-box; it is a forward-looking governance imperative.
The European Union’s Sustainability Reporting Omnibus will raise the thresholds for CSRD and CS3D, narrowing their scope to the largest companies, whilst revised ESRS standards promise lighter disclosure obligations…but not before Boards invest time in mastering the new requirements. Meanwhile, the International Sustainability Standards Boards (ISSB) are fast becoming the global baseline, with 36 jurisdictions already on board and the United Kingdom expected to endorse minimally amended versions in early 2026. Listed companies should anticipate mandatory ISSB-aligned disclosures from 2027, and private companies would be wise to pay close attention, as they are likely to follow.
Jurisdictional divergence adds significant complexity. Anti-ESG sentiment in parts of the United States are driving legislative pushback – creating reputational and litigation risks for multinationals, particularly those headquartered on the west side of the Atlantic. Boards must engage in a delicate balancing act: crafting a coherent global sustainability narrative that satisfies mandatory obligations without triggering a political or stakeholder backlash.
Nature-related disclosures are the next frontier. With ISSB consultations on further disclosures on nature-related risks and opportunities slated for 2026 and voluntary TNFD adoption accelerating, Boards should start mapping nature-related impacts and dependencies now, to avoid being blindsided by future requirements.
The message is clear: sustainability reporting is evolving from a compliance burden into a strategic differentiator. Boards that embed robust governance, anticipate regulatory shifts, and integrate sustainability into enterprise risk frameworks and strategies will move beyond simply meeting disclosure obligations. They will strengthen investor confidence, position their organisations for competitive advantage, protect against regulatory backlash, and be able to capitalise on nuanced consumer demand in a rapidly changing market.
