Key Impact Points:
- Companies will likely need to comply with multiple sustainability disclosure regulations due to the proliferation of requirements across jurisdictions.
- Understanding similarities and differences between regulations can improve disclosure accuracy and efficiency.
- Aligning with TCFD recommendations reduces reporting burden and creates additional business value beyond compliance.
As sustainability becomes a priority for governments, investors, and stakeholders, companies face challenges in navigating evolving disclosure regulations and standards. The proliferation of sustainability-related disclosure requirements—including the Corporate Sustainability Reporting Directive (CSRD)/European Sustainability Reporting Standards (ESRS), the International Financial Reporting Standards (IFRS) S1/S2 established by the ISSB, the U.S. SEC Climate Disclosure Rule, and California’s Senate Bills (SBs) 253 and 261—underscores the urgency for companies to enhance transparency, accountability, and consistency in their sustainability reporting.
Navigating Multiple Regulatory Frameworks
The expanding landscape of climate and sustainability disclosure requirements means companies will likely need to comply with more than one regulatory framework. Companies subject to multiple regulations may experience an additional reporting burden as they approach compliance.
Understanding the similarities and differences between each regulation’s requirements can improve disclosure accuracy and efficiency. There is considerable overlap across major sustainability-related disclosure regulations, particularly the CSRD/ESRS, IFRS S1/S2, SEC Rule, and California’s SB 253/261. Alignment with one often means at least partial alignment with others.
Aligning with TCFD Recommendations
Each of these frameworks aligns with the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations. Companies can reduce their reporting burden by aligning with these guidelines, which compel organizations to communicate ESG-related risks, outline their ESG strategy, disclose their ESG targets and progress, and strengthen ESG governance.
Leveraging Compliance for Business Value
Sustainability disclosure should be more than a compliance exercise. By understanding and aligning with the requisite standards and regulations, companies can leverage efficient preparation as a strategic advantage, positioning themselves favorably in an increasingly conscientious marketplace.
Coordinated preparation reduces reporting burden and associated costs while permitting compliance across jurisdictions. As global demand for transparent and accountable business practices surges, those who prioritize sustainability will not only comply with regulations but also thrive amid growing stakeholder expectations.
