Environmental, Social and Governance (ESG) Reporting

ESG Reporting Content Overview

We are witnessing a profound change in the corporate reporting landscape, with ESG moving from the shadows to centre stage. ESG Reporting is no longer a nice to have or the preserve of large or listed companies, but is now a strategic and statutory priority, placed on the same footing as financial reporting.

ESG Reporting requires companies, both publicly traded/listed undertakings and private companies, to report on environmental, social and governance matters, as well as in areas such as human rights, bribery and corruption. There are growing reporting obligations in this field to enable a company’s ESG activities to be measured, thereby promoting greater transparency and comparability between companies regarding their claims of “sustainability” and to prevent greenwashing. Importantly, this also assists in the redirection of capital away from unsustainable enterprises to more sustainable ones, a key aim of EU climate policy.

What we are witnessing is a profound shift in the corporate reporting landscape where ESG reporting is:

• Transitioning from niche to mainstream
• No longer the preserve of listed/large companies 
• No longer nice to have, but a strategic & statutory priority 
• Is being placed on the same footing as financial reportings 

This change is happening due to a global concern for our climate and the environment, as we can see with COP 26 & the EU goal to be carbon neutral 2050, to which policy makers and regulators are responding. Accurate information regarding a company’s ESG activities is critical to ensuring investment is directed towards sustainable companies. This is reinforced by obligations under the Sustainable Financial Disclosure Regulation whereby financial market participants are obliged to disclose sustainability information to end-investors, i.e. the “greenness” of their products. Further, companies can no longer afford to ignore the growing link between green credentials and ability to secure investment, as well as how a green profile is key to attracting and retaining customers and employees.

It is worth noting that ESG is related to but differs from corporate social responsibility (CSR). Both are concerned with companies having a positive social and environmental contribution, however, whereas CSR impacts internal processes and company culture, ESG is a measurable set of criteria which investors and external partners can look at in their evaluation of a company.

We provide global coverage of mandatory global ESG reporting law, regulations and standards, proposed, enacted & amended as well as voluntary ESG reporting frameworks (eg. TCFD, GRI) guidance documents and fact sheets. We do not cover voluntary national standards. 

Our coverage includes requirements for companies to obtain assurance for their ESG reports (audit/assurance). However, we do not cover sources specifically addressing auditors themselves, such as those related to their internal organization or professional training. ESG sources that apply to financial and investment institutions/companies and the public sector are strictly out of scope.

Coverage Included

Compliance & Risks’ coverage of ESG Regulations and Standards is historically comprehensive and includes, but is not limited to:

• Canada: Sustainability Disclosure Standard CSDS 1 – General Requirements for Disclosure of Sustainability-related Financial Information, Standard, December 2024
• China: Sustainability Disclosure Standards for Business Enterprises – Basic Standards (Trial), December 2024
• China: Sustainability Reporting for Major Listed Companies, Guidelines, April 2024
• EU: Annual Financial Statements, Consolidated Financial Statements and Related Reports of Certain Undertakings, Directive 2013/34/EU & Others – Amendment – (on corporate sustainability reporting), Directive (EU) 2022/2464 [Corporate Sustainability Reporting Directive]
• EU: Sustainability Reporting Standards (ESRS), Regulation, July 2023 
• EU: Sustainability Taxonomy Regulation (EU) 2020/852
• EU: Technical Screening Criteria for Determining the Conditions Under which an Economic Activity Qualifies as Contributing Substantially to the Transition to a Circular Economy, Pollution Prevention etc, Regulation, June 2023 [Taxonomy Environmental Delegated Act]
• EU: Establishing Technical Screening Criteria for Determining Conditions Under which an Economic Activity Qualifies as Contributing Substantially to Climate Change Mitigation, Regulation (EU) 2021/2139 – Amendment – (on adding screening criteria) Regulation, June 2023
• Finland: Amending the Auditing Act to Implement the Corporate Sustainability Reporting Directive (CSRD), Law No. 1250/2023
• France: Corporate Sustainability Reporting, Ordinance No. 2023-1142
• Germany: Corporate Sustainability Reporting, Draft Law, March 2024
• Germany: Corporate Due Diligence In Supply Chains Act, BGBl. 2959, 2021
• Hungary: Corporate Social Responsibility, Law No. CVIII, 2023
• Hong Kong (China): General Requirements for Disclosure of Sustainability-related Financial Information, Hong Kong Financial Reporting Standard S1, 2024
• Italy: Implementation of Directive (EU) 2022/2464 on Corporate Sustainability Reporting Obligations, Decree No. 125, 2024
• ISSB: General Requirements for Disclosure of Sustainability-Related Financial Information, Standard IFRS S1, 2023
• Iceland: Sustainability Disclosure Requirements and Sustainability Classification System in the Financial Sector, Law No. 25/2023
• India: Business responsibility and sustainability reporting by listed entities Circular SEBI/HO/CFD/CMD-2/P/CIR/2021/562
• Japan: Theme-based Sustainability Disclosure Standard on General Disclosures, Exposure Draft No. 1, March 2024
• Liechtenstein: Adaptation to Directive (EU) 2022/2464 on Corporate Sustainability Reporting, Law, 7 March 2024
• Malaysia: National Sustainability Reporting Framework, September 2024
• Norway: Reporting of Sustainability Information, Regulation No. 2354, 2022
• Romania: Amendment of Accounting Regulations with Regard to Sustainability Reporting, Order No. 85/2024
• Sweden: Annual Reports Law, SFS 1995:1554 and others – Amendment – (on implementing Directive (EU) 2022/2464 on Corporate Sustainability Reporting) Law, SFS 2024:347
• Turkey: Sustainability Reporting Standard TSRS 1 and TSRS 2, Decision, December 2023
• UK: Sustainability Reporting Standards, Guidance Document, Revised, May 2024
• USA: Enhanced Disclosures by Certain Investment Advisors and Companies Regarding Environmental, Social, and Governance (ESG) Investment Practices, Draft Rule, 87 FR 36654, 2022

We cover key ESG standards related to the content areas in your subscription as a part of our ESG Solution.

Related Regulatory Content

Our ESG Reporting regulatory content focuses on laws and regulations requiring companies to produce a report (in a similar way that they are required to produce a financial report) on their ESG performance, generally, annually. The report will encompass items such as how they are doing in terms of environmental protection, social responsibility and treatment of employees, respect for human rights, anti-corruption and bribery, diversity on company boards (in terms of age, gender, educational and professional background). 

Other regulatory content, such as Climate Change or Human Trafficking and Slavery, may also contain regulations requiring companies to report or disclose information in the ESG space or to perform due diligence e.g. under the UK Modern Slavery Act companies must disclose the steps they are taking to address slavery in the supply chain. Where the regulations are focused on one aspect, for instance human slavery, they will only be scoped to the Human Trafficking & Slavery Regulatory Content, as it does not involve an obligation to produce a report on the overall company’s ESG performance.