An update on global sustainability reporting frameworks

We wrote previously about our predictions for the future of global sustainability frameworks. We noted that, amid increased attention to and awareness of the climate crisis we collectively face, we expect an acceleration in global regulations related to the “E” in ESG.

 

In the past year, we’ve seen that prediction play out. The past months and years have seen growing convergence across regulatory frameworks, and, more generally, greater adoption of sustainability initiatives across regions—even those that may initially have been slower to climb aboard the proverbial bandwagon.

The foundation for many of these sustainability standards is the UN’s Sustainable Development Goals, or SDGs. These 17 global goals were devised in 2015 and aim to create a more equitable, more sustainable planet by 2030. They include initiatives such as clean water and sanitation, affordable and clean energy, sustainable cities and communities, responsible consumption and production, and climate action, among others.

 

These goals are multifaceted, interconnected, and important—and the regulatory frameworks they inspire have come with requirements and initiatives that can feel as overwhelming and complex as they are inspiring and exciting.

Recently, we’ve seen increased adoption of regulatory frameworks from local regulators in the APAC region. Most countries in the region have set new climate targets, with nearly one third having pledged to reach net-zero emissions by 2050.

 

In particular, regulatory bodies in Hong Kong and Singapore are rising to meet the sustainability challenge. The Monetary Authority of Singapore and the Hong Kong Monetary Authority, for example, have both published new frameworks for sustainability financing while the Hong Kong Securities and Future Commission is also extending guidelines for both fund disclosures and for ESG data providers and ratings agencies. In Japan too, sometimes regarded as a laggard in this space, there are efforts by the Financial Services Agency to shake off this image with new guidelines on impact investing, while Australia has also announced mandatory corporate disclosures and a fund product labelling regime.

 

This evolution is also being witnessed in other regions too, most notably in North America where regulators in both Canada and the US have announced disclosure frameworks despite political and commercial resistance.

As a growing number of regions demonstrate commitments to sustainability, we’re seeing a global trend toward the convergence of sustainability frameworks. One of the best-known sustainability organizations, the Sustainability Accounting Standards Board (SASB), was transitioned to the International Sustainability Standards Board (ISSB) after the merger of the Value Reporting Foundation and the International Financial Reporting Standards Body (IFRS).

 

The standards within the ISSB fall under the umbrella of the IFRS—the organization that helps shape accounting standards in 168 jurisdictions around the world. Now, with the backing of the IFRS, the standards contained within the ISSB will become increasingly important.

 

The ISSB released its first draft standards in 2023, and multiple global organizations are already working within them. We are starting to see the ISSB framework become the global standard for most organizations as they account for their sustainability activities.

Even as new frameworks emerge, we’re seeing connective tissue that unites them. For example, the Task Force on Climate-Related Financial Disclosures (TCFD), a collection of various regulatory, governmental, and corporate and finance bodies that support climate reporting frameworks, influence multiple global reporting standards, including the ISSB.

 

Other organizations, too, can fill any gaps that might exist in existing frameworks. The Task Force on Nature-Related Financial Disclosures (TNFD), for example, recognizes the oft-overlooked fact that nature and climate are not one and the same. To a degree, the initiatives outlined by the TNFD, which focuses heavily on nature and biodiversity, begin to fill some of the gaps left by the TCFD.

With the rise of increasingly accepted, increasingly complex frameworks, global corporations, asset managers and investment banks find themselves at a unique inflection point. It’s both an exciting time for organizations, as they gain clarity and solidarity around initiatives that will make the world a better place, and a potentially overwhelming one.

 

In the coming years, many organizations will need to adhere to multiple similar standards with different requirements, as they operate in different markets across regions, continents, and languages. Organizations will need to work toward goals that support one initiative for one framework, while doing something entirely different for another. In their nascence, these new frameworks—as welcome as they are—may spell complexity and confusion for the corporations determined to comply with them.

 

Publicly too, these same organizations find themselves subject to more scrutiny than ever. No longer are governments and their regulators the only audiences that need to be satisfied by their efforts; an increasingly vocal community of activist investors, charities and pressure groups are holding corporations to account as well, and calling them out when they are perceived to fall short of public expectations.

RWS can remove some of this complexity for our clients by handling language-related ESG challenges wherever they apply. When it comes to sustainability reporting, our regulatory team has the skill, experience, and processes needed to produce accurate, compliant translations across all required languages.

 

It may sound simple, but the terminology needed to adhere to these frameworks is complex and nebulous. The ability to translate it accurately into each language in an efficient, fast, and cost-effective way is critical for companies striving to be leaders in this arena.

 

We’re looking forward to working together as the landscape continues to change and meet new challenges as your partner. Ready to learn more? Reach out to our team today.