The International Financial Reporting Standards (IFRS) and the European Sustainability Reporting Standards (ESRS) are getting updated. The core objective is to establish a comprehensive framework for corporate sustainability reporting dealing with both financial and nonfinancial issues, in line with the changing times and stakeholder expectations. But will this lead to more effective corporate sustainability practices? Sixty-five percent of participants in a recent poll we conducted believe it indeed will.

Insight for What’s Ahead: The C-suite and the board should take this opportunity to assess where the company stands in terms of its sustainability practices. The revised disclosure norms provide an opportunity for companies to narrate stakeholder expectations. For example, the ESRS calls for a double materiality assessment—both an inside-out view of the impact the organization has on people and the environment and an outside-in view of the risks and opportunities of sustainability-related developments. It also requires detailed disclosures on ethics, corporate conduct, and culture.

To an extent, the ESRS will also mandate external assurances and require companies to revamp their due diligence policies. The revised IFRS can also help companies identify areas where they need to improve and act, such as accounting policies and insurance contracts, aiding effective risk management. Reporting on sustainability practices will require significant time, resources, and judgment. To use this exercise to their advantage, companies must take an integrated approach toward reporting to contribute to sustainable growth. For more information, read Practical Guide 1: Determining What to Include in Your Sustainability Story.