Sustainability Leaders to Work on Common Corporate Reporting Standard

The group of five firms is responding to criticism that inconsistent disclosures make ESG reporting confusing.


A group of five global sustainability leaders that set environmental, social, and governance (ESG) standards will work together to develop a common framework for corporate reporting, the firms said Friday. 

The lack of consistent sustainability disclosures has made assessing companies confusing and difficult, according to a joint report released Friday from the environmental nonprofit CDP (formerly the Carbon Disclosure Project), the Climate Disclosure Standards Board (CDSB), the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC), and the Sustainability Accounting Standards Board (SASB). Together, the organizations set the majority of ESG reporting in the industry. 

“We know that businesses globally are already using a mixture of our frameworks and standards to provide stakeholders with robust, effective information to drive better decisionmaking and capital allocation via their integrated report,” Charles Tilley, CEO of the IIRC, said in a statement.

The firms are also working with the International Organization of Securities Commissions (IOSCO) and the International Financial Reporting Standards (IFRS), the European Commission, and the World Economic Forum’s International Business Council.

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More investors than ever before are trying to incorporate ESG considerations into their investments, but standards around sustainability disclosures are still in early stages. While traditional credit rating agencies broadly assess companies based on the likelihood that they will default, it’s far less clear how to judge a company’s ESG performance. 

That discrepancy has attracted criticism from regulators in the US and Europe. In February, a top European Union regulator said ESG rating agencies and financial products need better supervision to prevent “greenwashing.” In June, the US Department of Labor (DOL) proposed a rule to chill ESG investments that are not focused solely on returns. 

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