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Establishing Consistent Global Guidelines for Environmental, Social, and Governance Reporting is Crucial

Non-standardized assessment of Environmental, Social, and Governance (ESG) factors persists among investors, creating confusion in determining a company's progress across various parameters. The lack of uniform measurement standards is a significant issue, making it challenging to assess a...

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Universal Harmonization of Environmental, Social, and Governance Accounting Measures is Necessary
Universal Harmonization of Environmental, Social, and Governance Accounting Measures is Necessary

Establishing Consistent Global Guidelines for Environmental, Social, and Governance Reporting is Crucial

The International Sustainability Standards Board (ISSB) is leading the charge in establishing universal Environmental, Social, and Governance (ESG) accounting standards, providing investors with comprehensive information about companies' sustainability risks and opportunities.

### Key Developments

As of June 2025, 36 jurisdictions are either adopting or taking steps to integrate the ISSB Sustainability Disclosure Standards into their regulatory frameworks. This includes 17 jurisdictions that have finalized their approach to using the standards. In June 2023, the ISSB published its inaugural general sustainability (IFRS S1) and climate (IFRS S2) reporting standards, designed to enhance transparency and consistency in sustainability reporting.

The ISSB has also announced proposed amendments to ease Scope 3 emissions reporting requirements for companies, and plans to publish exposure drafts on the SASB Standards and IFRS S2 Industry-based Guidance in July 2025.

### Role in Establishing Universal ESG Standards

The ISSB's primary role is to develop and implement consistent sustainability disclosure standards globally, helping to streamline ESG reporting and facilitate informed investment decisions. The ISSB's standards are gaining traction, with many jurisdictions committed to adoption. This widespread adoption is expected to enhance the comparability and reliability of sustainability reporting worldwide.

The ISSB works closely with other regulatory bodies, such as IOSCO, to encourage the integration of its standards into national and regional regulatory frameworks.

### Challenges and Future Directions

As the ISSB standards become more prevalent, jurisdictions will need to address challenges related to implementation and compliance, ensuring that companies accurately report sustainability data without undue burden. The ISSB will continue to refine its standards based on feedback and emerging best practices, ensuring that the standards remain relevant and effective in addressing global sustainability challenges.

Companies are encouraged to support the ISSB initiative to improve the standards. Adopting long-term sustainability strategies can improve a company's life, according to the ISSB. Companies are concerned about the cost of implementing the ISSB standards and the need for internal control and measurement systems.

ESG factors are used by investors to analyze companies for potential investments. Companies need to establish ESG goals and translate them into measurable and trackable efforts in their industries. Companies should participate in advisory councils and working groups where possible, to ensure their concerns and insights are considered in the development of the standards.

The ISSB standards, once published, should be aggressively adopted by companies to provide credible information on their sustainability efforts, addressing issues of greenwashing and contributing to a more sustainable global economy. The dangers of climate change necessitate moving quickly in setting standards for sustainability reporting.

  1. As the International Sustainability Standards Board (ISSB) continues to publish and refine its ESG accounting standards, such as the general sustainability (IFRS S1) and climate (IFRS S2) reporting standards, the intersection of climate-change, environmental-science, business, and finance becomes increasingly important for companies to address in their sustainability strategies.
  2. With universal ESG standards led by the ISSB gaining traction in various jurisdictions, businesses are encouraged to adopt long-term sustainability strategies and engage in advisory councils or working groups to establish ESG goals, translate them into measurable and trackable efforts, and provide credible information on their sustainability efforts to combat issues of greenwashing and contribute to a more sustainable global economy.

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