September 2021

Globally consistent ESG reporting

What is ESG reporting and why Why do we need global

is it important for business? sustainability reporting What factors are increasing
Environmental, Social and Governance standards? demand for ESG
(ESG) information can include a broad Today, we have the unique opportunity to information today?
range of issues, for example: greenhouse establish global sustainability reporting
gas emissions, energy, water and waste • Climate change is an urgent existential
standards, with a sense of urgency.
management/recycling, biodiversity issue that is relevant to companies in all
Reliable, consistent and comparable sectors and across all jurisdictions.
(environmental), health and safety, sustainability information is essential to Consistent and comparable information
diversity and inclusion, human rights, data help: is vital to investors and other
security, selling practices, product safety stakeholders, including how companies
(social) and business ethics and culture • Direct capital to sustainable enterprise
are managing the transition to a low
(governance). and to make global capital markets carbon economy
resilient and efficient
Sustainability reporting standards and • Address urgent world issues—climate • Much of the value of a business today is
frameworks have been developed to help change and the SDGs non-financial, represented by
companies enhance transparency and technology, intellectual capital, human
communicate sustainability information. Currently, there is a profusion of capital and the social license to operate.
These address the varying objectives of sustainability reporting standards, Investors and others need insight into
frameworks and initiatives. As a result: these factors in order to understand
users of this non-financial information,
how enterprise value is created and
which can be summarized as: • Voluntary sustainability reporting sustained
• Factors driving enterprise value, to standards and frameworks have
gain insights into the resilience of proven insufficient to promote • Investors and other users of corporate
companies’ business models and consistent and comparable ESG information are increasingly demanding
performance information comparable and reliable information
supply chains, as well as the broader because long-term returns are affected
risks they face (for example, for use by • There is a lack of consistent and
by global economic growth and wider
investors) comparable information (including
societal and environmental issues, which
• Companies’ role in sustainable period to period, company to have direct impacts on the performance
development, to understand the company, within sectors) and and prospects of companies
impact companies have on people, the inconsistent quality in the governance
economy and the planet, and their and controls over information, as well • Today’s corporations see themselves as
wider contributions towards the as the type and extent of third-party serving ends that go beyond financial
United Nations Sustainable assurance provided over that success and many are adopting a
information. Selective reporting that purpose-led approach. It is important
Development Goals (SDGs)
does not connect narrative that corporations measure and report
on the results of their efforts to live up
information and financial information
to the purpose they define for their
can lead to greenwashing
enterprise. This enhances integrity and
authenticity of the environmental and
social strategic goals companies are
setting out

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Globally consistent ESG reporting

A global standard-setting approach based reporting. The front and back half of
Although 90% of S&P on principles of legitimacy, independence, annual reports are intrinsically linked.
companies were transparency, public accountability and
oversight, and thorough due process
There are many ESG initiatives, but the
leading standard-setters and framework
reporting ESG metrics enables the development of high-quality
sustainability reporting standards. This
providers are set out below.
• CDP (formerly the Carbon Disclosure
by the end of 20191, results in consistent, comprehensive, and
comparable information.
Project) runs a disclosure system on
environmental impacts that can be
according to a 2020 Global sustainability reporting standards aggregated for use in data analytics
BlackRock survey of are necessary because: • The Climate Disclosure Standards
Board (CDSB) offers a framework for
• Climate change and the SDGs require a
clients, 53% of global global approach
reporting environmental information
with the same rigor as financial
respondents cited • Businesses have global value chains,
face global risks, and access capital
information
• The Global Reporting Initiative (GRI)
“poor quality or from global investors
• Investors, companies and other
develops standards that relate to
companies’ impacts on the economy,
availability of ESG data stakeholders benefit from a common the environment, and society
language for sustainability reporting • The Task Force on Climate-related
and analytics” and standards, facilitating comparisons Financial Disclosures (TCFD), set up by
the Financial Stability Board, provides a
another 33% cited ESG considerations may also apply to framework for companies to report on
existing financial reporting requirements. the effects of climate change on their
“poor quality of Educational materials published by the business
IASB and the FASB remind preparers that
sustainability many current accounting standards
• The Value Reporting Foundation 3
brings together the Integrated
already require an entity to consider ESG
investment reporting” matters when they have a material effect
Reporting Framework, which sets out
principles for communication on how
as the two biggest on the financial statements, especially
where judgement and estimates are
value is created over time, and the
Sustainability Accounting Standards
barriers to adopting required, for example in assessing
impairment of long life assets.
Board (SASB) Standards, which offer
enterprise value-relevant sustainability
sustainable investing. 2 metrics by sector and industry
What is the landscape? Who
are the standard-setters for At the end of 2020, the ‘Group of 5’
leading sustainability bodies (CDP, CDSB,
ESG disclosure? GRI, IIRC and SASB) set out a vision for a
Traditionally, financial information has comprehensive corporate reporting
been published in corporate reports and system and made a commitment to work
sustainability information in separate together and with the International
sustainability reports. However, as it has Financial Reporting Standards Foundation
become clearer how sustainability issues (IFRSF) to achieve this. They subsequently
can affect the ability of companies to published a prototype climate-related
create enterprise value over time, users financial disclosure standard to illustrate
increasingly expect to see disclosure of how their different frameworks and
ESG information that relates to enterprise
value creation in mainstream corporate

1 Governance & Accountability Institute, Flash Report S&P 500: Trends on the sustainability reporting practices of S&P 500 Index Companies
2 BlackRock, Sustainability goes mainstream: 2020 Global Sustainable Investing Survey
3 In June 2021, the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB) merged to form the Value Reporting

Foundation (VRF)

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Globally consistent ESG reporting

standards, together with TCFD, could form standards should go further where work to convene and accelerate moves
the basis of a global standard. 4 necessary to meet the EU's own to global standards
ambitions and be consistent with • Deloitte is a global signatory to TCFD
The landscape is now changing fast. Last the EU's legal framework and reports in line with its
year the IFRSF issued a consultation on • In the US, the SEC has recently recommendations and is directly
establishing an International Sustainability consulted on climate-related represented on the TCFD taskforce
Standards Board (ISSB) that would sit disclosures. Furthermore, the US
alongside the existing IASB. It is on track to President’s international climate
announce the creation of the ISSB by finance plan explicitly includes a What is Deloitte’s position on
COP26 in November 2021. IFRSF have commitment for the US to support ESG reporting standards?
confirmed they will use the above and shape the work being
prototype as a ‘potential basis’ for global undertaken by the IFRSF and IOSCO Deloitte supports corporations disclosing
sustainability reporting standards under towards “consistent, comparable, high-quality, transparent, relevant, and
the ISSB and have set up a Technical and reliable climate-related comparable non-financial information that is
Readiness Working Group to take this financial disclosures”. The SEC is connected to financial information within
work forward. co-chair of IOSCO’s Technical mainstream corporate reporting. This will
Expert Group charged with help direct capital to long-term sustainable
The International Organization of business, by showing how corporations are
undertaking technical work to
Securities Commissions (IOSCO) is an creating long-term value and by providing
assess the viability of the IFRSF’s
important player in global sustainability insights into their business models, the
sustainability reporting standards
reporting standards. It stands ready to broader risks they face and the impact they
initiative
play the same role it did for financial have on people, the economy and the planet.
reporting standards 20 years ago. The In addition, in 2020, The World Economic
The standards should be global. The issues at
IOSCO Board has committed to work with Forum’s (WEF) International Business
stake are global, investors and other
the IFRSF to develop an effective system Council (IBC) published 21 core ESG
stakeholders are often global, and many
architecture for setting sustainability metrics for measuring stakeholder
companies operate and source through
reporting standards under a new ISSB. It capitalism, which leverage existing
global value chains.
sees this as a route to developing standards and metrics. The project
sustainability reporting standards that can highlights that business wants to be part
Deloitte supports a baseline global reporting
serve as a “baseline for consistent and of the solution, and acts as a catalyst
standard for sustainability to be developed
comparable approaches to mandatory towards global standards. by the IFRSF, which jurisdictions can further
sustainability-related disclosures across See Appendix for a timeline and details on supplement. We, therefore, encourage the
jurisdictions”. the organizations referenced. closest collaboration between jurisdictions,
the future ISSB and other international
There are also important developments at
the jurisdictional level.
What is Deloitte’s role in the sustainability standard-setters to achieve the

move to global ESG standards? greatest possible international convergence.

• In Europe, the proposal for a This is consistent with statements by the G7
• Deloitte strongly supports the
Corporate Sustainability Reporting and G20 ministers of finance and central
proposals by IFRSF bank governors.
Directive (CSRD) includes plans for
• Deloitte has acted as a facilitator,
new EU sustainability reporting
together with WEF and the Impact To achieve disclosures of the necessary
standards by 2022/2023. The
Management Project (IMP), to the quality, companies need to implement high-
European Commission (EC)
joint work of the ‘Group of 5’ on both quality mechanisms for oversight, controls
recognizes that it is in the interests
their Statement of Intent and and verification, including assurance,
of companies and investors to have
prototype climate-related financial applying the same rigor as for financial
standards that are globally aligned,
disclosure standard reporting. Independent assurance can
and that EU standards should take
• In addition to supporting the enhance the credibility and reliability of
account of the essential elements
development of metrics on information that corporations disclose.
of globally accepted standards
stakeholder capitalism as part of the
currently being developed. EU
WEF/IBC project, Deloitte is leading its

4 The work of the ‘Group of 5’ has been facilitated by Deloitte, the World Economic Forum and the Impact Management Project.

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ESG Reporting 101

APPENDIX

Timeline of moves towards global ESG standards

2020
September IFRS Foundation (IFRSF) issues a consultation on establishing a sustainability standards board. It received nearly 600
responses
The leading sustainability standard-setters and frameworks (‘Group of 5’: CDP, Climate Disclosure Standards Board
(CDSB), Global Reporting Initiative (GRI), International Integrated Reporting Council (IIRC) and Sustainability
Accounting Standards Board (SASB)) issue a Statement of Intent. In this, they set out a vision for a comprehensive
corporate reporting system and make a commitment to work together and with the IFRSF to achieve this. The work
was facilitated by Deloitte, the Impact Management Project (IMP) and the World Economic Forum (WEF)
October WEF International Business Council (IBC) publishes Measuring Stakeholder Capitalism, which includes 21 core
metrics covering the pillars of principles of governance, planet, people and prosperity. The metrics leverage
standards from the five leading sustainability standards and framework reporting providers. The project highlights
that business wants to be part of the solution, and acts as a catalyst towards global standards
December The ‘Group of 5’ issues a prototype climate-related financial disclosure standard to illustrate how their different
frameworks and standards, together with the recommendations of the Taskforce on Climate-related Financial
Disclosures (TCFD), could form the basis of a global standard. It is intended to give the IFRSF a running start in
developing sustainability reporting standards
2021
February IOSCO Board commits to work with the IFRSF to develop an effective system architecture for setting sustainability
disclosure standards under a new International Sustainability Standards Board (ISSB). They see this as a potential
route to developing standards that can serve as a ‘baseline for consistent and comparable approaches to mandatory
sustainability-related disclosures across jurisdictions’
March IFRSF confirms there is significant support for them to establish ISSB and that it is on track to make an
announcement in time for COP26. IFRSF sets up a Technical Readiness Working Group (TRWG) to provide technical
input and commits to use the prototype (see above) as a potential basis for a new standard. The group will also
consider how technical expertise might transition to a new board, with a view to consolidation. The participants in
this group are CDSB, IASB, TCFD, VRF (formerly IIRC and SASB), and WEF with IOSCO as observer
IOSCO sets up a technical expert group to inform the organization on its potential endorsement of ISSB as the global
standard-setter for sustainability-related corporate reporting
SEC initiates a public consultation on disclosure rules and guidance on to climate-related disclosures, proposed
modifications, potential new SEC disclosure requirements and potential new disclosure frameworks
April The US President’s international climate finance plan references a commitment to work with IFRSF and IOSCO to
support and shape their work towards ‘consistent, comparable, and reliable climate-related financial disclosures’
and to enhance the compatibility of resulting recommendations or standards ‘with the US domestic framework and
regulatory process’
The European Commission (EC) publishes its proposed Corporate Sustainability Reporting Directive (CSRD), the
successor to the Non-Financial Reporting Directive (NFRD)
IFRSF publishes a feedback statement and consultation on constitutional changes which can bring in provisions for
ISSB

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Globally consistent ESG reporting

May EC tasks European Financial Reporting Advisory Group (EFRAG) to start technical work to develop draft sustainability
reporting standards consistent with the CSRD
June G7 Finance Ministers and Central Bank Governors publish a communiqué, in which they support the IFRSF’s initiative
on sustainability reporting
IIRC and SASB merge to form the Value Reporting Foundation (VRF), with three key resources: Integrated Thinking
Principles, Integrated Reporting Framework and SASB Standards. It is committed to delivering a more coherent
corporate reporting system by working closely with the IFRSF and other standard-setters
IOSCO Board publishes a report on issuers’ sustainability-related disclosures that elaborates on IOSCO's vision and
expectations for the IFRSF’s work towards a global baseline of investor-focused sustainability standards to improve
the global consistency, comparability and reliability of sustainability reporting
July G20 Finance Ministers and Central Bank Governors publish a communiqué, in which they welcome the work of the
IFRSF to develop a baseline global reporting standard under robust governance and public oversight, building upon
the TCFD framework and the work of sustainability standard-setters, involving them and consulting with a wide
range of stakeholders to foster global best practices
September IFRSF conducts stakeholder outreach on the work of the TRWG
November Expected announcement of new ISSB at COP26

ESG Reporting Acronyms

How they fit in with moves to global
Acronym Name What they do
sustainability reporting standards
Standard-setters and frameworks
CDP (Formerly Runs a global disclosure system for Committed to work towards
Carbon investors, companies, cities, states and comprehensive corporate reporting system
Disclosure regions to manage their environmental (Statement of Intent) and developed
Project) impacts, with a particular focus on prototype climate-related financial
climate change. Its system is based on a disclosure standard
questionnaire that is sent to companies
on a range of climate-related topics, from
which it develops rankings, benchmarks
and data feeds
CDSB Climate An international consortium that provides Committed to work towards
Disclosure companies a framework for reporting comprehensive corporate reporting system
Standards Board environmental information to investors (Statement of Intent) and developed
with the same rigor as financial prototype climate-related financial
information disclosure standard
Member of IFRSF Technical Readiness
Working Group (TRWG)
FASB Financial Responsible for setting accounting Issued staff educational paper in March
Accounting standards for public companies in the US 2021 on the intersection of ESG and
Standards Board (Generally Accepted Accounting financial accounting standards
Principles)
FSB-TCFD Task Force on TCFD recommendations support effective Member of TRWG
Climate-related climate-related financial disclosures to

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Globally consistent ESG reporting

How they fit in with moves to global

Acronym Name What they do
sustainability reporting standards
Financial investors, based on the pillars of
Disclosures governance, strategy, risk management,
metrics & targets. Established by the
Financial Stability Board (FSB)
GRI Global Reporting Sets standards for reporting to Committed to work towards
Initiative stakeholders on economic, environmental comprehensive corporate reporting system
and social impacts, providing information (Statement of Intent) and developed
about an organization’s positive or prototype climate-related financial
negative contributions to sustainable disclosure standard
development Signed a memorandum of understanding
with EFRAG
IAASB International Sets high-quality international standards Issued Staff Audit Practice Alert, The
Auditing and for auditing, assurance, and quality Consideration of Climate-Related Risks in
Assurance control that strengthen public confidence an Audit of Financial Statement in October
Standards Board in the global accounting profession 2020
Published Extended External Reporting
(EER) Assurance Non-authoritative
Guidance in April 2021
IASB International Independent body responsible for Published educational material: Effects of
Accounting development and publication of climate-related matters on financial
Standards Board International Financial Reporting statements in November 2020
Standards (IFRS), which are adopted in Member of TRWG
144 jurisdictions
IFRS Foundation/ International A not-for-profit, public interest Concluded consultation on establishing an
IFRSF Financial organization established to develop a international sustainability standards board
Reporting single set of high-quality, understandable, (ISSB). IFRSF is on track to announce the
Standards enforceable and globally accepted new ISSB by COP26
Foundation accounting standards. It appoints Established the TRWG and is consulting on
members of IASB constitutional changes to bring in ISSB
IIRC International See entry under VRF below
Integrated
Reporting
Council
ISSB International The board that IFRSF proposes to The intention is for ISSB to play the same
Sustainability establish alongside IASB with a remit to role for sustainability reporting that IASB
Standards Board set global sustainability reporting plays in financial reporting
standards
SASB Sustainability See entry under VRF below
Accounting
Standards Board
VRF Value Reporting Merged entity of IIRC and SASB from June Committed to work towards
Foundation 2021 to provide investors and corporates comprehensive corporate reporting system
with a comprehensive corporate (Statement of Intent) and developed
reporting framework across the full range

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Globally consistent ESG reporting

How they fit in with moves to global

Acronym Name What they do
sustainability reporting standards
of enterprise value drivers and standards prototype climate-related financial
to drive global sustainability performance. disclosure standard
VRF has three key resources: Integrated Member of TRWG
Thinking Principles, Integrated Reporting
Framework and SASB Standards
• Integrated Reporting
Framework: Integrated reporting
is a process founded on
integrated thinking for
communicating how an
organization’s strategy,
governance, performance and
prospects lead to the creation of
value in the short, medium and
long term
• SASB Standards: Standards for
disclosure of sustainability
information to investors, by
sector. SASB Standards identify
issues most relevant to
enterprise value creation across
77 industries

Other bodies with direct interest in moves to sustainability reporting standards

EC European The executive branch of the European Develops the Corporate Sustainability
Commission Union, responsible for proposing Reporting Directive (CSRD) aimed at
legislation, enforcing EU laws and improving sustainability reporting and
directing the union's administrative ensuring it is brought into a company’s
operations management report to better leverage the
potential of the European single market
and to contribute to the transition to a fully
sustainable and inclusive economic and
financial system in line with the European
Green Deal and the UN Sustainable
Development Goals (SDGs)
EFRAG European Private body, established by the EU to Reforms of EFRAG are underway under a
Financial serve the European public interest, in proposed CSRD, so that it is expected to
Reporting developing and promoting European become the EU standard-setter for
Advisory Group views in the field of financial reporting, European sustainability reporting
ensuring that these views are considered standards from 2022. The EC has already
by the IASB, and advising the EC on tasked EFRAG to start the work for
endorsement of IFRS for use in the EU developing and proposing EU sustainability
reporting standards

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Globally consistent ESG reporting

How they fit in with moves to global

Acronym Name What they do
sustainability reporting standards
FSB Financial Stability Promotes international financial stability Established TCFD in response to addressing
Board by coordinating national financial systemic risks of impact of climate change
authorities and international standard- on financial stability
setting bodies in developing strong
regulatory, supervisory and other
financial sector policies, and encouraging
coherent implementation in jurisdictions
IFAC International The global organization for the Issued statements in support of global
Federation of accountancy profession, comprising 180 sustainability reporting standards under
Accountants member and associate organizations in the umbrella of IFRSF
130 countries and jurisdictions,
representing nearly 3 million professional
accountants
IOSCO International The international body that brings Sits on the Monitoring Board that oversees
Organization of together the world's securities regulators IFRSF
Securities and is recognized as the global standard- Established a Technical Expert Group under
Commissions setter for the securities sector its Sustainable Finance Taskforce that will
undertake preparatory work in advance of
IOSCO‘s potential endorsement of the ISSB
as the global standard-setter for
sustainability-related corporate reporting
Observer of TRWG
UN SDGs United Nations’ A plan of action for people, planet, peace No direct connection to global standard-
Sustainable and prosperity, signed by governments in setting but SDGs are a frequent reference
Development 2015, comprising 17 Sustainable point in corporate reporting
Goals Development Goals and 169 targets to be
achieved by 2030
WEF / The Forum World Economic An international organization for public- The WEF’s International Business Council
Forum private co-operation, aiming to engage (IBC) has identified 21 common metrics for
political, business, cultural and other value creation, known as Stakeholder
leaders of society to shape global, Capitalism Metrics. The project is seen as a
regional and industry agendas stepping stone towards global
sustainability reporting standards
Member of TRWG

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Globally consistent ESG reporting

CONTACTS
Public Policy & Regulatory Audit & Assurance/Sustainability Reporting
David Barnes Veronica Poole
Public Policy & Regulatory Leader, Deloitte Global IFRS and Corporate Reporting Leader, Deloitte Global
Ph: +44 20 7303 2888 Ph: +44 20 7007 0884

Wallace Gregory
Neil Stevenson
Regulatory, Independence & Conflicts Leader, Deloitte Global
Director, Audit and Assurance, Deloitte UK
Ph: +1 203 761 3190
Ph: +44 20 7007 1602
Kyra Kaszynski
Director, Public Policy, Deloitte Global Regional Contacts
Ph:+1 646 241-8044
Kristen Sullivan
Christiane Cunningham Americas Region Sustainability Services Leader, Deloitte Global
Director, European Public Policy, Deloitte Global Ph: +1 203 708 4593
Ph: +32 2 800 70 21
Laurence Rivat
EU Corporate Reporting Policy Leader, Deloitte France
Ph: +33 1 55 61 67 60

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