ESG Reporting: Preparing for Sustainability and Climate-Related Disclosures

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Emerging global ESG standards make reliable data, analysis, and governance essential for sustainability and climate-related reporting.

Sustainability information is becoming part of financial reporting, risk management, and long-range business planning. Organizations need reliable data on the environmental, social, and governance issues that could affect operations, financial performance, and long-term prospects.

ESG—environmental, social, and governance—describes factors that can create risks and opportunities for an organization. Environmental topics may include greenhouse gas emissions, energy use, water, pollution, biodiversity, and ecosystem services; social topics can include workforce, health and safety, and community impacts; and governance covers oversight and accountability.

Global standards take shape

The IFRS Foundation established the International Sustainability Standards Board (ISSB) at COP26 in November 2021 to develop a global baseline of sustainability disclosure standards for investors. In March 2022, the ISSB issued exposure drafts covering general requirements for sustainability-related financial information and climate-related disclosures.

As ESG Today reported, the ISSB plans to issue its first finalized standards in June 2023.

The standards are intended to provide a global baseline that jurisdictions can adopt independently or incorporate into broader reporting requirements. Publishing the standards will be only the first step. Their reach will depend on adoption by regulators and use by companies.

June 26, 2023 update: The ISSB issued its first two sustainability disclosure standards. Read about IFRS S1, General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2, Climate-related Disclosures.

Reporting readiness

Issuance of the standards does not eliminate the analytical and organizational work required to prepare useful disclosures. Organizations still need to determine which risks and opportunities are material, what data they need, how estimates are developed and reviewed, and how sustainability information connects to strategy, governance, and financial planning.

Preparing for sustainability and climate-related reporting involves:

• Identifying environmental, social, and governance risks and opportunities that could affect operations, financial performance, or long-term prospects

• Assessing materiality and determining which information could influence users’ decisions

• Estimating and documenting greenhouse gas emissions and other relevant environmental metrics

• Evaluating physical climate risks, such as flooding and changing temperatures, and transition risks related to policy, technology, markets, and regulation

• Using climate scenario analysis to test how future conditions could affect operations, investments, and long-range planning

• Establishing processes for data collection, review, validation, governance, and disclosure

• Evaluating biodiversity and ecosystem services when they are material to an organization’s operations, assets, projects, or risk profile

These activities support reporting and inform decisions. The same analysis used to prepare disclosures can inform investment, operations, climate adaptation, emissions reduction, environmental planning, and business strategy.

How Greene can help

Will your company be ready for ESG reporting? Greene Economics works with engineering and science partners to support climate- and greenhouse-gas disclosure analysis, biodiversity and ecosystem-services valuation, economic analysis, regulatory impact assessment, climate-risk analysis, materiality assessment, scenario analysis, emissions estimates, and disclosure support.

See our Service Areas.

Contact us to learn how we can help you meet your reporting goals.