BDO - Sustainability reporting R-Evolution

The ISSB and standard setters for the EU and the US have all made significant progress in developing sustainability reporting standards. There are similarities and differences in their approach taken.

Carlo Luison – Partner, Sustainable Innovation - BDO Italy, 09 Mag 2022 - 11:45

Acceleration on the firt 2022 quarter

Consistent with developments in sustainability reporting in 2021, the first quarter of 2022 has included significant progress by standard setters, regulators and some jurisdictions in the development and future application of sustainability reporting standards.

The International Sustainability Standards Board (ISSB), and standard setters and regulators in major jurisdictions, are working actively to complete the due process steps necessary in order to issue finalized sustainability reporting standards in the near term.

Some of the largest jurisdictions have issued either working copies of standards or exposure drafts for public comment. Finalized standards may come into effect as early as 2023 for some entities, with many more entities being subject to some type of sustainability reporting standards from 2024-2026. In some jurisdictions, these requirements will apply regardless of whether an entity is publicly listed.

The IFRS Foundation, in particular, has also progressed in consolidating standard setters into its operations as well as signing a key memorandum of understanding. On 31 January 2022, the Climate Disclosure Standards Board (CDSB) consolidated into the IFRS Foundation.  It is expected that the Value Reporting Foundation (VRF), which is responsible for the Integrated Reporting Framework and the SASB Standards, will consolidate into the IFRS Foundation by June 2022.

In March 2022, the IFRS Foundation signed a memorandum of understanding with the Global Reporting Initiative (GRI) which commits the ISSB and the Global Sustainability Standards Board (GSSB) to coordinate their work program and standard-setting activities. The memorandum of understanding is expected to increase the compatibility and interconnectedness of investor-focused baseline sustainability information. The global baseline concept has been welcomed by the G20 Leaders, the International Organization of Securities Commissions (IOSCO) and others.

In summary, the ISSB has progressed in appointing its inaugural board and either merging or coordinating work efforts with several major sustainability reporting standard setters, which will further the goal of the ISSB to issue consistent global standards and reduce fragmentation.


Issuance of first Exposure Drafts: IFRS S1 and S2

On 31 March 2022, the ISSB issued two exposure drafts:

  • IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information – this Exposure Draft proposes to require entities to disclose information about all material sustainability-related risks and opportunities to which an entity is exposed, regardless of whether a specific IFRS Sustainability Disclosure Standard has been issued addressing that topic (e.g., fair labor practices, water usage, etc.). The exposure draft proposes that disclosure of sustainability-related financial information be centered on four primary topics, which are aligned with those in the TCFD recommendations.
  • IFRS S2 Climate-related Disclosures - the objective of this Exposure Draft is to require an entity to provide information about its exposure to climate-related risks and opportunities.


European Sustainability Reporting Standards (ESRS)

The European Union is pursuing its own sustainability standard setting agenda via the Corporate Sustainability Reporting Directive (CSRD), which aims to move investors towards sustainable investments.  The CSRD would replace the Non-Financial Reporting Directive (NFRD), which was introduced in 2014.

The CSRD will require EU Sustainability Reporting Standards (ESRS) to be developed and, since late-2021, the European Financial Reporting Advisory Group (EFRAG) has been releasing draft papers of ESRSs as staff have completed the first steps of drafting prior to the publication of exposure drafts for public comment and due process. Working papers may be accessed on EFRAG website.

Concurrently, the European Council has been undertaking the necessary steps to finalize the CSRD. On 24 February 2022, the European Council agreed to its position on the general approach to the CSRD, as proposed by the European Commission. The final negotiations of the European Council, the European Parliament and the European Commission are starting at the date of issue of this ISRB, and it is anticipated that the CSRD will be finalized towards the end of Q2 2022.


Climate-related disclosures for Securities and Exchange Commission (SEC)

On 21 March 2022, the US Securities and Exchange Commission (SEC) issued proposed rules that would be applicable to both domestic and foreign registrants and would require significantly enhanced climate-related disclosures in registration statements and annual reports (e.g., on Form 10- K). The proposed financial statement disclosures would be presented in a footnote to the consolidated financial statements, while the other disclosures enumerated below would be presented in a separately captioned section of the filing prior to management’s discussion and analysis (MD&A). Registrants would be required to electronically tag both the qualitative and quantitative disclosures in Inline XBRL.

Comments on the proposal are due 30 days after the date of publication in the Federal Register or May 20, 2022, whichever is later.

A detailed summary of the proposed rule and significant anticipated impacts may be accessed on BDO USA’s SEC page on BDO website.

For further information and guidance on sustainability, please refer to BDO’s Global IFRS Micro-site.


It is the sole responsibility of the Sustainable Finance Partner to check the truthfulness, accuracy and completeness of the data and information entered on this web page, when within its competence and provided by the Partner. Borsa Italiana S.p.A. is not responsible for the contents developed by third parties and in particular by the Sustainable Finance Partners contained in this web page.

Glossario finanziario

Hai dei dubbi su qualche definizione? Consulta il glossario finanziario di Borsa Italiana.


Borsa Italiana non ha responsabilità per il contenuto del sito a cui sta per accedere e non ha responsabilità per le informazioni contenute.

Accedendo a questo link, Borsa Italiana non intende sollecitare acquisti o offerte in alcun paese da parte di nessuno.

Sarai automaticamente diretto al link in cinque secondi.