6 March 2018
Published: The Accountant
Author: Stephanie Wix
Environmental, social and governance (ESG) reporting trends are on the rise, according to a report by the World Business Council for Sustainable Development (WBCSD) and the Climate Disclosure Standards Board (CDSB).
The report found that environmental topics have been emerging in reporting requirements, yet governance topics have been considered the least. The WBCSD’s global platform, The Reporting Exchange has found that 69% of reporting requirements currently require environmental disclosures, compared to 49% and 30% for social and governance topics, respectively. The report explained that this could be the result of complex regulations for different aspects of sustainability, or because of the political and regulatory challenges in tackling corporate governance issues in comparison to compliance.
Regionally, the report saw exponential growth of ESG requirements since 2010 in Asia Pacific, Europe and Norther America, but also a steady increase in South America, showing the most sustained development of corporate reporting over time. Yet in Europe, was the largest number of provisions requiring good governance practice disclosures, potentially the result of directives on governance from the European Union.
Therefore, in ten years the number of voluntary reporting requirements has increased globally from under 10 to 182. Of these voluntary requirements, 80% are issued by non-governmental organisations such as CDP, the GRI and the Sustainability Accounting Standards Board (SASB). Although there are mandatory provisions, compliance or explanation (required from companies), and voluntary provisions, the majority of the reporting requirements are mandatory as a result of legislation and regulation.
The report concluded that there should be a greater emphasis on individual companies and stakeholders as businesses work towards achieving a sustainable future. Yet the report noted that some conditions within the company sector, thresholds, or size, may influence applicability, obligation and relevance of provisions.