International Sustainability Standards Research Articles

Non-financial reporting—A key element in assessing sustainable corporation performance

In the modern economy, non-financial reporting has become an essential tool for evaluating the social performance of companies. This article explores the importance of non-financial reporting as a central element in assessing sustainable performance, focusing on analyzing sustainability reports published by 20 companies listed on the Bucharest Stock Exchange (BVB). The study examines how these companies approach environmental, social, and governance (ESG) aspects in their reports and what is the relationship between these aspects and financial reporting indicators. Through the statistical analysis of the non-financial reports published by companies participating in the study with the help of the Pearson coefficient and the regression equations, the correlation between the financial and non-financial indicators is determined in order to validate the research hypotheses. The results indicate increased attention to transparency and social responsibility, highlighting the correlation between sound reporting practices and cooperative performance by combining social and environmental aspects with financial information. The research also highlights the challenges encountered in the reporting process and the level of compliance with international sustainability standards.

Navigating legitimacy: diverse stakeholder perspectives on the IFRS foundation’s establishment of the ISSB

Purpose In 2020, the IFRS Foundation’s public consultation on Sustainability Reporting provided an opportunity for stakeholders to share their opinions on the Foundation’s proposals. This paper aims to analyze the comment letters that would legitimize the IFRS Foundation to institutionalize the International Sustainability Standards Board (ISSB). Design/methodology/approach This study used Python to develop a model for analyzing all 577 submissions that the IFRS Foundation received, using a combination of quantitative and qualitative content analysis methods. Findings Support for the creation of the ISSB was not unanimous but reached 68%. Key supporting arguments were that the IFRS Foundation could harmonize sustainability reporting standards by leveraging its expertise in setting accounting standards, and use its existing relationships to enforce sustainability reporting. Key counterarguments were: the IFRS Foundation lacks expertise in the areas of sustainability and climate; sustainability reporting should be integrated into financial reporting rather than being disclosed separately; the proposals were limited in scope (single materiality, focus on investors’ information needs and climate change centrism); and the IFRS Foundation should aim to endorse already established frameworks instead. Practical implications A consensus between supporters and critics was the need to make sustainability reporting mandatory. Endorsed by IOSCO, the ISSB released its inaugural standards, focusing on climate-related disclosures, effective from 2024 in jurisdictions that choose to adopt them. Originality/value The findings show that the establishment of the ISSB by the IFRS Foundation only partially fulfilled the demand for the harmonization of sustainability reporting standards. As a result, broader and non-investor-centric sustainability information may continue to be reported under alternative frameworks.

Textual Dimensions of Sustainability Information, Stock Price Informativeness, and Proprietary Costs: Evidence from Integrated Reports

We examine whether integrated report quality, IRQ, is negatively associated with stock price synchronicity, an inverse measure of firm-specific information, and the extent to which the relation between IRQ and synchronicity is attenuated by proprietary costs. We measure IRQ using machine-based textual analysis along four dimensions: textual attributes, topical content, integrated reporting capitals, and financial versus sustainability information. We find that measures of IRQ based on seven textual attributes are negatively related to synchronicity, which is consistent with higher quality text containing more firm-specific content. Using PhraseLDA to identify topics in integrated reports, we find that contents related to the three most common categories—governance, performance, and risks and opportunities—are negatively associated with synchronicity. We find similar results for all integrated report capitals, except manufactured capital. Further, we find that sustainability information has a larger negative association with synchronicity than financial information. We also find that proprietary costs stemming from product market competition attenuate the association between IRQ and synchronicity, which suggests the informativeness of integrated reports varies with a firm’s competitive environment. Our results may inform the International Sustainability Standards Board as it considers the role of the Integrated Reporting Framework in developing sustainability standards.

Regulatory framework for the formation of sustainability reporting

This article is dedicated to the study of the regulatory framework for the formation of sustainability reporting, the relevance of which is determined by the increasing impact of enterprisesʼ activities on the environment, society, and the economy. To date, the formation of sustainability reporting for Ukrainian enterprises is not mandatory, but in the context of enhanced European integration, understanding international and European reporting standards becomes critically important. The aim of the research is to review the current regulatory framework for the formation of sustainability reporting and to develop proposals for its implementation in the activities of Ukrainian business entities. The article analyzes the standards of the Global Reporting Initiative (GRI), European Sustainability Reporting Standards (ESRS), and the standards of the International Sustainability Standards Board (ISSB). GRI offers universal, thematic, and sectoral standards that provide a comprehensive approach to disclosing information about the impacts of an enterprise on the economy, society, and the environment. The ESRS standards, which have become mandatory for large companies and enterprises whose shares are listed on EU stock exchanges, aim at harmonizing sustainability reporting within the framework of the European Green Deal. ISSB standards, which include recommendations from SASB, TCFD, and CDSB, ensure the disclosure of financially significant information for investors. The analysis showed that all three systems of standards are largely aligned with each other, which facilitates the process of transition between them for enterprises. The use of GRI standards in Ukraine can serve as a basis for further transition to ESRS and ISSB standards in the event of Ukraineʼs accession to the EU. The article emphasizes the importance of developing methodological recommendations for the implementation of GRI for Ukrainian enterprises. The conclusions of the study indicate the necessity of actively implementing international sustainability reporting standards in Ukraine to enhance transparency, stakeholder trust, and strategic enterprise management.

Enhancing Capacity to Comply with Sustainability Standards in the Milk Value Chain in East Africa: Challenges, Prospects, and Policy Implications

This paper addresses the need to contextualize sustainability standards and supply chain management in dairy value chains in East Africa, where milk perishability and limited cold storage significantly impact the industry. The study highlights the importance of localizing these standards, given the greater dependence on local supply chains following the COVID-19 pandemic. Drawing on milk standards literature and various interventions aimed at promoting systemic change, this review analyses the capacity of marginalized stakeholders in East Africa’s dairy value chains to meet sustainability standards, focusing particularly on the social dimensions of these standards. The findings indicate that compliance with sustainability and safety standards is predominantly restricted to formal dairy networks, which process less than 20 percent of milk produced in the region. Most milk sales occur through informal or unorganized markets, which face significant barriers to meeting international sustainability benchmarks. The review advocates for the alignment of international sustainability standards with the unique conditions of the informal markets dominating East Africa’s dairy sector. It suggests enhancing stakeholder capabilities and addressing regulatory barriers as necessary steps for improving compliance with these standards. The co-operative model is highlighted as a promising approach to integrating farmers and marginalized value chain actors into the formal sector, thereby facilitating incremental adoption of sustainability standards. The paper identifies strategic entry points for organizing and upgrading the supply chain, including capacity building, certification, and catalyzing farmer groups to compliance and productivity.

Promoting Sustainability in Housing Sector Using Eco-Friendly Materials

Abstract The significance of sustainability in the housing sector is essentially demanded nowadays, driven by the global emphasis on sustainable development and urgent environmental challenges. It emphasizes the need for innovative strategies to enhance resource efficiency and mitigate negative environmental impacts during construction. Achieving sustainability requires incorporating environmental design principles and eco-friendly building materials, necessitating comprehensive considerations in urban planning and design. This involves promoting sustainable public transportation, communities, facilities, and green spaces. The aim of this study is to convert non-sustainable houses into sustainable ones; aiming to support Iraqis seeking housing that meets international sustainability standards. It also aims to assist the Iraqi government in fulfilling its commitments under the Paris Agreement and improve the quality of life for Karbala’s residents. The primary objective is to design a house that balances environmental, economic, and social factors, adhering to international environmental standards and sustainable development requirements. This involves utilizing sustainable techniques like renewable energy and eco-friendly materials. The project adopts a comprehensive approach that accounts for the various dimensions of sustainability during the design process.

SECTORAL ANALYSIS OF PRINCIPLE 2 OF BRSR FILINGS

There is a growing global demand from investors for more rigorous regulations regarding non-financial disclosures. Internationally, several ESG reporting frameworks, such as the Global Reporting Initiative (GRI) , Carbon Disclosure Project (CDP) , Sustainability Accounting Standards Board (SASB) , and the Taskforce on Climate-related Financial Disclosures (TCFD) , have been established. These frameworks require companies to report on their sustainability performance, underlying principles, processes, and key performance indicators. The International Sustainability Standards Board (ISSB) has issued a global baseline for sustainability reporting in 2023 as IFRS S1(General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures) .

Integrating sustainability factors into corporate financial reporting in the modern ESG agenda context. Part 2

Subject. This article discusses innovations and trends in the development of corporate reporting standardization within the framework of the IFRS Foundation project and the initiative of the European Financial Reporting Advisory Group. Objectives. The article aims to reveal the essence of the main innovations and characterize the prospects for improving corporate financial reporting in the context of the development of ESG Standards by the International Sustainability Standards Board of the IFRS Foundation and the Task Force of the European Sustainability Reporting Standards Project. Methods. For the study, I used analysis and synthesis, comparison, and generalization. Results. Based on an analysis of the ESG agenda modern realities, the article identifies prerequisites and trends in the development of corporate reporting standardization in relation to the integration of sustainable development factors into financial reporting, and determines the impact of innovations of the two systems of sustainability reporting standards being developed on the informative and analytical value of corporate reporting. Conclusions and Relevance. The need to overcome the limitations and shortcomings of the GRI standards predetermined the development of two new systems of standards in the context of the ESG agenda modern realities. The International Sustainability Standards Board of the IFRS Foundation is developing standards designed to become a global framework for the disclosure of information on sustainable development, focused on the needs of investors and financial markets. The European Financial Reporting Advisory Group is developing European Sustainability Reporting Standards, which should cover a wide range of topics to meet the information needs of various stakeholders. New systems of ESG reporting standards are aimed at generating complete, coherent, comparable and verifiable information in the field of sustainable development. The research results obtained will contribute to the further promotion of sustainability reporting, improve corporate financial reporting practices by incorporating the impact of sustainability issues on value creation, and enhance stakeholder awareness and decision-making in a comprehensive and ESG-informed manner.

Is greater connectivity of financial and non-financial information in annual reports valued by market participants?

The establishment of the International Sustainability Standards Board (ISSB), and the endorsement by the International Financial Reporting Standards (IFRS) foundation of the principles underlying the Integrated Reporting (IR) Framework, attest to a regulatory intent to develop a disclosure framework better connecting sustainability-related financial disclosures with financial disclosures. Strategic Reporting (SR), effective in the United Kingdom (U.K.) since 2013, is a prime example of such a framework. Utilizing proprietary data from PwC U.K., we find higher SR disclosure quality is associated with higher liquidity, lower cost of capital, and more accurate, less dispersed analysts’ forecasts. We then hypothesize and compare these impacts with the capital market effects of disclosure quality under the reporting framework preceding SR. We find that the effects of higher liquidity and lower cost of capital are more pronounced under SR, suggesting that SR, as a mandated, more connected reporting framework, enables more effective capital market communication. We also find that the incremental capital market benefits are more significant for entities with higher exposure to the change, better sustainability performance and higher organizational complexity. For regulators and standard setters, these findings indicate that their emphasis on greater connectivity of financial and non-financial information is valued by market participants.

Integrating sustainability factors into corporate financial reporting in the modern ESG agenda context. Part 1

Subject. This article discusses innovations and trends in the development of corporate reporting standardization within the framework of the IFRS Foundation project and the initiative of the European Financial Reporting Advisory Group. Objectives. The article aims to reveal the essence of the main innovations and characterize the prospects for improving corporate financial reporting in the context of the development of ESG Standards by the International Sustainability Standards Board of the IFRS Foundation and the Task Force of the European Sustainability Reporting Standards Project. Methods. For the study, I used analysis and synthesis, comparison, and generalization. Results. Based on an analysis of the ESG agenda modern realities, the article identifies prerequisites and trends in the development of corporate reporting standardization in relation to the integration of sustainable development factors into financial reporting, and determines the impact of innovations of the two systems of sustainability reporting standards being developed on the informative and analytical value of corporate reporting. Conclusions and Relevance. The need to overcome the limitations and shortcomings of the GRI standards predetermined the development of two new systems of standards in the context of the ESG agenda modern realities. The International Sustainability Standards Board of the IFRS Foundation is developing standards designed to become a global framework for the disclosure of information on sustainable development, focused on the needs of investors and financial markets. The European Financial Reporting Advisory Group is developing European Sustainability Reporting Standards, which should cover a wide range of topics to meet the information needs of various stakeholders. New systems of ESG reporting standards are aimed at generating complete, coherent, comparable and verifiable information in the field of sustainable development. The research results obtained will contribute to the further promotion of sustainability reporting, improve corporate financial reporting practices by incorporating the impact of sustainability issues on value creation, and enhance stakeholder awareness and decision-making in a comprehensive and ESG-informed manner.

The International Sustainability Standards Board’s (ISSB) past, present, and future: critical reflections and a research agenda

Purpose This paper aims to critically reflect on the formation of the International Sustainability Standards Board (ISSB), its current agenda and likely future direction. The authors consider the relationships between the ISSB and other standard setters, regulators, practitioners and stakeholders, and develop a comprehensive research agenda. Design/methodology/approach The authors review and critically analyse academic and practitioner publications alongside the ISSB’s workplans to identify the themes impacting the future of the ISSB and to develop a research agenda. Findings Three key themes emerge from the authors’ analysis that are likely to influence the future of the ISSB: the jurisdiction and scope of the ISSB – how far its influence is likely to extend, both geographically and conceptually; the ongoing legitimacy challenge the ISSB is facing in terms of setting an agenda for sustainability reporting; and the “capture” of sustainability reporting by influential stakeholders including capital providers. Originality/value The formation of the ISSB is critical to the future of sustainability reporting. The authors provide a comprehensive and topical overview of the past, present and potential future of the ISSB, highlighting the need for further research and providing a research agenda that addresses outstanding questions in the field.

Global investor responses to the International Sustainability Standards Board draft sustainability and climate-change standards: sites of dissonance or consensus

Purpose This paper aims to examine sites of dissonance or consensus between global investor responses to the draft standards, International Financial Reporting Standards S1 (IFRS) (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures), issued by the International Sustainability Standards Board (ISSB). Design/methodology/approach A thematic content analysis was used to capture investor views expressed in their comment letters submitted in the consultation period (March to July 2022) in comparison to the ex ante position (issue of draft standards, March 2022) and ex post summary feedback (ISSB staff papers, September 2022) of the ISSB. Findings There was investor consensus in support of the ISSB and the development of the draft standards. However, there were sites of dissonance between investors and the ISSB, notably regarding the basis and focus of reporting (double or single/financial materiality and enterprise value); definitional clarity; emissions reporting; and assurance. Incrementally, the research further highlights that investors display heterogeneity of opinion. Practical and Social implications The ISSB standards will provide a framework for future sustainability reporting. This research highlights the significance of such reporting to investors through their responses to the draft standards. The findings reveal sites of dissonance in the development and alignment of draft standards to user needs. The views of investors, as primary users, should help inform the development of sustainability-related standards by a global standard-setting body apposite to current policy and future reporting requirements, and their usefulness to users in practice. Originality/value To the best of the authors’ knowledge, this paper makes an original contribution to the comment letter literature, hitherto focused on financial reporting with a relative lack of investor engagement. Using thematic analysis, sites of dissonance are examined between the views of investors and the ISSB on their development of sustainability reporting standards.

Shifting perspectives: unveiling the dual nature of sustainability materiality in integrated reports

PurposeIntegrated reporting enhances the meaningfulness of non-financial information, but whether this enhancement is progressive or regressive from a sustainability perspective is unknown. This study aims to examine the influence of the Integrated Reporting (<IR>) Framework on the disclosure of financial- and impact-material sustainability-related information in integrated reports.Design/methodology/approachUsing a disclosure index constructed from the Global Reporting Initiative’s G4 Guidelines and UN Sustainable Development Goals, the authors content analysed integrated reports of 40 companies from the International Integrated Reporting Council’s Pilot Programme Business Network published between 2015 and 2017. The content analysis distinguished between financial- and impact-material sustainability-related information.FindingsThe extent of sustainability-related disclosures in integrated reports remained more or less constant over the study period. Impact-material disclosures were more prominent than financial material ones. Impact-material disclosures mainly related to environmental aspects, while labour practices-related disclosures were predominantly financially material. The balance between financially- and impact-material sustainability-related disclosures varied based on factors such as industry environmental sensitivity and country-specific characteristics, such as the country’s legal system and development status.Research limitations/implicationsThe paper presents a unique disclosure index to distinguish between financially- and impact-material sustainability-related disclosures. Researchers can use this disclosure index to critically examine the nature of sustainability-related disclosure in corporate reports.Practical implicationsThis study offers an in-depth understanding of the influence of non-financial reporting frameworks, such as the <IR> Framework that uses a financial materiality perspective, on sustainability reporting. The findings reveal that the practical implementation of the <IR> Framework resulted in sustainability reporting outcomes that deviated from theoretical expectations. Exploring the materiality concept that underscores sustainability-related disclosures by companies using the <IR> Framework is useful for predicting the effects of adopting the Sustainability Disclosure Standards issued by the International Sustainability Standards Board, which also emphasises financial materiality.Social implicationsDespite an emphasis on financial materiality in the <IR> Framework, companies continue to offer substantial impact-material information, implying the potential for companies to balance both financial and broader societal concerns in their reporting.Originality/valueWhile prior research has delved into the practices of regulated integrated reporting, especially in the unique context of South Africa, this study focuses on voluntary adoption, attributing observed practices to intrinsic company motivations. To the best of the authors’ knowledge, it is the first study to explicitly explore the nature of materiality in sustainability-related disclosure. The research also introduces a nuanced understanding of contextual factors influencing sustainability reporting.

Indicators for measuring and reporting corporate nature-related impacts, dependencies, and risks

Businesses are embedded within nature. Their supply chains, operations, and products fundamentally depend on and impact nature. These impacts and dependencies can give rise to nature-related risks (as well as related opportunities). However, despite growing expectations from stakeholders, most businesses are currently not adequately measuring and reporting on these. To date, it has not been clear whether this requires the development of entirely new indicators, or whether various existing sustainability reporting frameworks could provide sufficient information on nature-related risks. This paper evaluates the decision-usefulness of existing indicators for the softwood plantation forestry industry in Australia. Decision-usefulness is assessed against three criteria: (1) relevance and completeness; (2) faithful representation; and (3) comparability. The results show some potential for adaptation of indicators already used in sustainability-related corporate accounting and reporting, which could help reduce the reporting burden and encourage uptake. However, gaps remain in measuring the financial consequences for business from nature-related risks and in providing sufficient comparable information to evaluate performance across industries and locations. Implications are discussed in relation to recent recommendations from the Taskforce on Nature-related Financial Disclosures (TNFD) and International Sustainability Standards Board (ISSB) sustainability standards IFRS S1 and S2.

Adoption of IFRS Sustainability Standards (IFRS-S) In Brazil: Contributions to The Development of Climate-Related Disclosure Indicators

Objective: The main objective of this article is to develop climate-related disclosure indicators that are applicable to the Brazilian business context. Method: The Delphi method was used to achieve this objective, involving several experts representing various user groups that influence the formulation of accounting standards in Brazil. The Delphi method is a decision-making tool that establishes an effective communication process, facilitating the resolution of complex problems. Result and Conclution: As a result, 40 climate-related disclosure indicators were mapped based on the results of two Delphi rounds. Overall, 52.5% (21/40) of climate-related disclosure indicators were identified as highly applicable. Among these highly relevant indicators, there were 10% (2/21) of Governance, 24% (5/21) of Strategy, 42% (9/21) of Risk Management and 24% (5/21) of Quality Indicators. Metrics and Goals. Furthermore, around 20% (8/40) of climate-related disclosure indicators received 100% approval from experts. Research implications: Os resultados deste estudo fornecem contribuições práticas para os órgãos de normatização nacionais, visando a criação de normas de divulgação relacionadas ao clima mais eficientes e menos onerosas para as empresas brasileiras. Esta melhoria enfatiza a relevância dos resultados do estudo para a elaboração de normas de divulgação relacionadas ao clima no contexto brasileiro. Originality/value: Brazil is currently in the process of preparing the bases for adopting sustainability standards issued by the International Sustainability Standards Board (ISSB). Before this new standard is implemented effectively, the Federal Accounting Council (CFC) and the Brazilian Sustainability Pronouncements Committee (CBPS) recognized the importance of harmonizing the main disclosure indicators of this standard with Brazilian regulations and business characteristics. . In this case, the contribution of several thematic working groups may be necessary, especially with regard to the mechanism that allows entities with varying capabilities and levels of preparation to apply this new standard. This study made an academic contribution by demonstrating the use of the Delphi method as a corroboration tool for defining an accounting standard.

Sustainability factors consideration: Emerging trends in financial reporting

Subject. This article discusses the requirements for disclosure of sustainability factors in financial statements due to the release of the International Disclosure Standard IFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information. Objectives. The article aims to reveal the content of the main provisions set forth in the IFRS S1 Standard issued by the International Sustainability Standards Board (ISSB) (sponsored by the IFRS Foundation), assess the possibility of applying the requirements of the Standard in Russia, and identify possible problems in its implementation and propose ways to solve them. Methods. For the study, we used analysis, synthesis, comparison, generalization, and abstraction. Results. The article defines that the presentation of information on risks and opportunities related to sustainable development should be carried out from the perspective of four aspects, namely governance, strategy, risk management, metrics and goals of the organization in the field of sustainable development. It discloses the content of the main sections of the Standard and formulates the factors and conditions for the applicability of the IFRS S1 Standard in Russia, as well as possible problems associated with its application, and proposals for their solution. Conclusions. The requirements for disclosure of financial information on risks and opportunities related to sustainable development, established by the International Disclosure Standard IFRS S1, are aimed to increase the availability of key users of financial statements to information reflecting the impact of sustainable development factors on the financial position, financial results, and cash flows of the organization. Standardization of disclosure of such information can help reduce the costs of preparers, analysts, auditors and other interested users, and stimulates the current trend of introducing the concept of sustainable development into management practice, including by Russian organizations.

DOES FOREIGN OWNERSHIP AND FOREIGN BOARD MEMBER IMPROVE THE QUANTITY AND QUALITY OF SUSTAINABILITY REPORTING AMONG NON-FINANCIAL LISTED FIRMS IN NIGERIA?

The purpose of this study is to investigate the impact of foreign ownership and directorship on sustainability disclosures of non-financial listed firms in the developing countries. Sample consisted of 30 firms across the seven sectors of non-financial listed firms in Nigeria, covering a period of 5 years, 2016 – 2020. Analysis of data collected was carried out from three perspectives, first content analysis of sustainability quantity and quality disclosures by the sampled firms, using 97 indicators based on the GRI 2016 standards was carried out, with the 30 firms divided into two, firms with and without foreign ownership and directorship. The result was analysed using t-test to determine whether there was a significant difference between the means of the two groups. Then correlation between sustainability disclosures and foreign ownership and directorship was determined. Finally, an ordinary pooled regression analysis was carried out to determine the effect of foreign ownership and directorship on sustainability disclosures. T-test results showed positive significant difference between sustainability reporting quantity and quality disclosures of firms with and without foreign ownership and directorship. It was also found that sustainability quantity and quality disclosures were positively correlated with foreign ownership and directorship. Furthermore, the regression analysis showed that foreign ownership has a positive significant effect on sustainability quantity disclosure at 5% (0.150) but an insignificant effect on sustainability quality disclosures. Foreign directorship has positive significant effect on sustainability quantity and quality disclosures at 1% (9.731) and 5% (6.466) respectively. It is recommended that sustainability reporting should be made compulsory by the Financial Reporting Council of Nigeria, having adopted the first two standards issued by the International Sustainability Standards Board (ISSB).

중요성에 근거한 지속가능성 공시와 주가 정보성

[Purpose] This study analyzes the relationship between the amount of materiality-based sustainability information and stock price informativeness for Korean listed companies. In addition, the study investigates whether this relationship appears differentially according to the company’s information demand (uncertainty of profit information and degree of growth opportunity).&#x0D; [Methodology] The amount of materiality-based sustainability information is calculated based on the importance identified by Sustainability Accounting Standards Board among the ESG information disclosure data of individual firms provided by Bloomberg. Stock price informativeness is defined as stock price variations reflecting firm-specific information excluding market and sector influences.&#x0D; [Findings] The empirical results for 2,932 listed firm-year samples from 2010 to 2020 are as follows. First, the amount of materiality-based sustainability information showed a positive association with stock price informativeness. This suggests that material-based sustainability information has a company-specific information usefulness in terms of stock price information, suggesting that the information is usefully used in the capital market. Second, this relationship was found to be significant the more uncertain the company’s profit information and the lower the growth opportunity.&#x0D; [Implications] This study suggests the usefulness of sustainability information based on materiality, and provides policy implications in terms of preliminarily examining the impact on domestic companies when the International Sustainability Standards Board are applied in the near future. In addition, it has policy implications in that material sustainability information could have a differential impact on companies depending on the information demand.

ESG Reporting and Metrics: From Double Materiality to Key Performance Indicators

This article conceptualises the link between firms’ value chains and distribution networks and the requirements for double-materiality assessments in contemporary reporting regulations worldwide. The new European Sustainability Reporting Standards (ESRS) and the standards for sustainability reporting issued by the International Sustainability Standards Board (ISSB), called IFRS S1 and IFRS S2, require companies to report their own direct (scope 1) and indirect (scope 2) greenhouse gas (GHG) emissions as well as GHG emissions in their value chains and distribution networks (both scope 3). However, GHG emissions comprise just one dimension of information that is relevant to understand when assessing, managing and reporting the footprints and impacts of a firm and are, therefore, only a fraction of the key performance indicators (KPIs) related to ESG that should be disclosed. Through a case study, this article demonstrates the connection between a due diligence analysis of a firm’s value chains and distribution networks; an analysis of the competitive parameters of its business model; the identified impacts, risks and opportunities; and the double-materiality perspective. The double-materiality perspective prioritises actions based on probability and significance, creating a natural space to identify KPIs. The implication of this study is that firms can be assisted in identifying relevant KPIs based on double-materiality assessments aided by applying the REGS model because it guides firms in choosing the most relevant KPIs.

Climate-Related Disclosure for Canadian Energy Companies - Getting Ready for the Mandatory Regime: Voluntary Guidelines, Rule Proposals, Governance Implications, and Best Practices to Avoid Greenwashing Allegations

Canadian energy companies are increasingly releasing corporate statistics, metrics, and strategy on climate-related matters to the public. These disclosures, offered both independently and in response to investor and stakeholder demand, detail strategic management of risks and opportunities related to a company’s present and future environmental impact. The Task Force on Climate Related Financial Disclosures (TFCD) and the International Sustainability Standards Board (ISSB) have helped to standardize voluntary disclosure frameworks and standards, influencing recent proposals for mandatory disclosure rules issued by securities regulators in Canada and the United States. This article presents a comprehensive review of this fast-shifting landscape, outlining governance implications and best practices to help organizations navigate these complex regulatory developments. In this context, it also presents noted trends and international perspectives to help Canadian companies manage legal exposure to civil and regulatory “greenwashing” allegations stemming from voluntary and mandatory public disclosures.