In 2023, California passed two climate disclosure and financial reporting laws, SB 253 and SB 261, which will require firms of certain sizes that conduct business in the state to assess and report on climate-related considerations, including greenhouse gas (GHG) emissions figures and material financial risks related to climate. ESG and climate-related disclosures have come into focus for companies and policymakers as stakeholders increasingly recognize climate-related impacts on businesses.

The Securities and Exchange Board of India (SEBI), on 12 July 2023, issued a circular (the circular) establishing new regulations to augment the reporting of Environmental, Social, and Governance (ESG) performance of the listed entities by integrating assurance and value chain disclosures. The SEBI’s focus in this area aligns with its objective to protect the interests of investors. Investors increasingly apply ESG parameters to their analysis to identify material risks and growth opportunities. This is because the investors believe that a purpose-led organization usually has a sound and resilient business model. With the growing importance of ESG, communicating what a company does in ESG is paramount.

The standards issued by the International Sustainability Standards Board (ISSB) bring much-needed global baselining in sustainability reporting. The latest announcement by the Financial Stability Board asking the IFRS Foundation to take over monitoring the progress of companies’ climate-related disclosures from the Task Force on Climate-related Financial Disclosures (TCFD) is a step toward aligning framework and disclosure requirements. This will enable global benchmarking, capacity building, and monitoring of the progress of company disclosures and adoption. The standard-setting program of the ISSB is set to gather momentum with the exposure draft for narrow-scope revisions contemplated to the SASB standards already open for comments. Countries around the world that follow IFRS standards for financial reporting should adopt the ISSB standards to align financial and non-financial reporting frameworks. Companies should holistically evaluate the disclosures in these new standards and prepare to adopt them, including training their teams and embedding technology. In our experience, stakeholder communication and managing expectations are critical, and the involvement of all stakeholders early in the process will be key to successful adoption.