Executive Summary

GRI. SASB. TCFD. Integrated Reporting.¹ These are just a few of the more than 100 different reporting frameworks and standards intended to guide corporations in reporting on their sustainability efforts.²  While a corporation’s sustainability or corporate social responsibility departments were often largely responsible for choosing which reporting framework(s) to employ, today the decision is more consequential and merits CEO and board attention for three reasons:

• First, because these frameworks are relevant not just for disclosure, but can help companies decide which issues to focus on as part of their business strategy.
• Second, because sustainability is no longer siloed, but a mainstream strategic issue for companies and their stakeholders.
• Third, because complying with these frameworks can involve a significant ongoing commitment of a firm’s resources across all corporate departments and business units, the decision on which and how many frameworks to use can have meaningful implications for the use of the firm’s time and resources.

Insights for What’s Ahead

In deciding which frameworks to use, CEOs and their teams should:

• Expect more alignment across the major voluntary reporting frameworks, and some limited consolidation of standards.The aim of most of the harmonization initiatives currently underway is to improve the alignment of voluntary reporting criteria and standards with one another. The approach recognizes the different but complementary value of the various standards that have been adopted in the marketplace.
• Determine what frameworks work best for the company and its stakeholders. Companies should take a company-first approach to determining what to report on. External reporting frameworks are useful starting points for determining what issues to report on, but companies should avoid using these frameworks as their primary input. It is more important to focus on the matters that are tied to the company’s long-term performance and impact on stakeholders, society at large, and the environment.
• Anticipate developments in mandatory sustainability reporting. With voluntary reporting standards in flux, efforts to introduce mandatory reporting standards are gaining traction. Progress on the EU’s reporting requirements and the potential introduction of sustainability reporting standards from the International Financial Reporting Standards (IFRS) Foundation are the key developments to monitor on the mandatory standards’ front.³ Companies should be prepared to adapt their sustainability disclosures as the emergence of new standards seems likely.