Sustainability reporting is no longer an obscure concept for many global corporations; in fact, it is more and more common. It all started with corporate financial reporting, then the practice extended to environmental reporting from companies involved in environmental incidents, and then the concept of sustainability took off as companies realized the link between sustainability and core business operations. The scope of corporate reporting has, indeed, evolved into a promising trend for 2020 and beyond.

Sustainability reporting, or non-financial reporting, aims at communicating economic, environmental, and social matters in a holistic way to different stakeholders. The company’s performance  dependant on economic, environmental, and social factors that coexist and yet are interdependent.

The reality today is that even if not mandatory, certain companies report on sustainability since it brings a lot of added value, contributes positively to corporate reputation, and helps to attract capital.

Sustainability reporting is a powerful tool for companies to show different stakeholders how they  create value, respect human rights and preserve the environment. Sustainability is in everyone’s rear view mirror today; everyone cares how sustainable an activity is. Individuals themselves make choices based on how sustainable the options are.

Recently, non-financial reporting has become mandatory for certain types of companies in some countries. It is likely that more companies will need to start reporting in the following years. In any case, even if this type of reporting is not mandatory, it would be wise to track this trend and to perhaps start reporting before it is mandatory in your jurisdiction.

In the next paragraphs, we provide:

  • A brief overview of the current reporting frameworks
  • Non-financial or sustainability reporting in the EU, and other sample countries
  • The benefits of reporting and the challenges that might arise
  • What you need to keep in mind about sustainability reporting

Reporting Frameworks

There are several sustainability reporting frameworks that allow companies to report on sustainability. These frameoworks provide topics, metrics, and information that should be provided in order to report on sustainability.

Global Reporting Initiative (GRI)

GRI is the most widely used reporting framework among companies. GRI has two sets of standards, the “universal standards” and the “specific topics standards.” The universal standards are meant to help companies from all industry sectors report on topics that are general and contextual and to identify the matters that are relevant to the company (material topics). The specific topics standards, by contrast, help companies with detailed reporting on economicenvironmental and social topics.

GRI specific topic on environment (GRI 300) includes subtopics, such as water and effluents, emissions, effluents and waste, environmental compliance, and supplier environmental assessment.

Social topics (GRI 400) include occupational health and safety, training and education, child labor, and marketing and labeling. For more information on standards:

For more information about GRI in general:

International Organization for Standardization: ISO26000

ISO 26000 is an international standard giving recommendations for companies that want to operate in a socially responsible manner. It was developed by the International Standard Organization, which is the biggest international organization issuing voluntary standards.

ISO 26000 is different from other ISO standards, such as 9001 Quality management systems and 14001 Environmental Management Systems, because ISO 26000 is guidance. As guidance, 26000 does not contain requirements as does 9001, and companies cannot receive certification for this particular standard.

ISO 26000 has seven principles, including accountability, transparency, ethical behavior, among others. These principles set the framework for companies to take socially responsible decisions. ISO 26000 also sets out seven core topics, which include organizational governance, human rightslabor practicesthe environment, fair operating practices, consumer issues, and community involvement and development.

ISO26000 overlaps with and helps companies contribute to the United Nations (UN) sustainable development goals, and it also aligns with the Organisation for Economic Co-operation and Development (OECD) guidelines, according to the information available on the ISO website.

The reality today is that even if not mandatory, certain companies report on sustainability since it brings a lot of added value, contributes positively to corporate reputation, and helps to attract capital.

However, one key difference is that a company can be held accountable under the OECD guidelines for adverse impacts if endorsed by the government, whereas that is not the case under ISO 26000.

More information about ISO 26000 is available at

Organisation for Economic Co-operation (OECD) Guidelines

The OECD Guidelines for Multinational Enterprises are recommendations addressed by governments to multinational companies operating in or from adhering countries. The OECD guidelines provide non-binding principles; however, there is a mechanism through which individuals or non-governmental organizations can issue a complaint against a multinational about their business conduct. The national contact points are responsible for handling any complaint. Complaints are resolved through conciliation or mediation. 

The OECD guidelines address matters, such as disclosure of information on all material matters regarding their activities, human rights, employment and industrial relationsenvironment, taxation, anti-bribery, among others.

The OECD has 36 member countries and 13 adhering countries which have subscribed to the guidelines. Among the member countries are Australia, Belgium, Chile, Canada, France, Germany, Korea, Mexico, Turkey, and the United States. Among the adhering countries are Brazil, Argentina, Morocco, and Egypt.

More about the OECD Guidelines is available at

International Integrated Reporting Council (IIRC)

The IIRC has a unique approach to corporate reporting, including the need for communication about value creation over time using the six capitals:  financial, manufactured, intellectual, human, social and relationship and natural. The six capitals are seen as inputs that the business activity will transform into outputs. The framework helps companies to produce an integrated report with the right balance between quantitative and qualitative information about the six capitals. The primary addressees, according to this framework, are the capital providers.

The most relevant characteristic of this framework is that it allows the company to generate a stand alone report  or include the report in the annual financial report, including information on environmental and social matters

More about the IIRC framework is available at

The United Nations (UN) Global Compact

The UN Global Compact consists of ten principles touching upon human rights, laborenvironment, and anti-corruption topics. The principles are meant to guide companies to embrace corporate sustainability. As part of the process of adopting the ten principles, a company’s leadership must commit to include the ten principles in the strategy and the operation of the company.

The strategy takes into consideration the risks, impacts and opportunities identified by the company. Then, the company has to implement the strategy, measure the effectiveness of the actions in the strategy and report on the progress.

This framework emphasizes continuous improvement; once the company reports on the progress, it might be necessary to reassess the risks and eventually readjust the strategy.

More than 13,000 organizations publish a communication on progress as required by the UN Global Compact.

More about the UN Global Compact

European Union overview

Since 2018 in the EU, companies that fall into the scope of the national law that transposes the Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014[1] must report on non-financial matters, such as environmental, social, and employee-related matters.

According to Directive 2014/98/EU, listed companies, banks, insurance companies and other companies designated as public-interest companies have to report on non-financial matters.

If your company is headquartered or has operations in one of the member states, it is worth taking the time to ascertain whether your company is subject to this reporting standard.

Directive 2014/95/EU has been transposed into the different member states with certain nuances; for example, in France and the UK, even non-listed companies that reach certain thresholds are required to report.

Deadlines on when to present the non-fianancial information also vary from country to country. In France, non-financial information has to be presented with the annual report, and such information has to be accessible to the general public on the company’s website within eight months after the end of the financial year. The information shall remain available to the public on the company’s website for 5 years.

If your company is headquartered or has operations in one of the member states, it is worth taking the time to ascertain whether your company is subject to this reporting standard.

Regarding the method of reporting non-financial matters, the Directive allows using national, European or international reporting frameworks, among which are the UN Global Compact, ISO 26000,and the GRI. It is up to the member states to decide what would be an acceptable way of reporting such information, either following any of the international frameworks or even a national one.

It is also important to say that there are some proposals issued in May 2018 by the Commission derived by the EU Action Plan on Financing Sutainable Growth. Among such proposals, there is one whose purpose is to issue a taxonomy on the activities that would be considered as environmentally sustainable and the other on how asset managers and institutional investors would have to integrate environmental, social, and governance factors (ESG) in the risk process[2] (this one was adopted on November 2019 and published on December 9, 2019 in the Official Journal). This confirms the growing trend towards mandatory sustainability reporting.

Other countries

In contrast to the EU, where non-financial reporting has become mandatory for certain types of companies and not only for listed companies; in other countries, non-financial or sustainability reporting is linked to the stock market, therefore mainly listed companies need to report on ESG  matters.

For example, in the US, public companies are required to disclose information on the material effect of compliance with environmental federal, state, and local laws on the company’s capital expenditures, earnings and competitive position. In short, this links environmental compliance with economic performance.

Similar to the US, in Malaysia, Singapore, Philipines, and Thailand, there is a requirement for listed companies to report on non-financial matters. Whereas in Indonesia, Singapore, and Vietnam, the reporting requirement stems from an environmental law or corporate social responsibility related law.

Therefore, there is a growing trend toward sustainability reporting across the globe. We can conclude that in the coming years, it might become mandatory to report even for non-listed companies.

Benefits from reporting

One of the causes of increased sustainability reporting is that investors require more information about the ESG matters (which can be summarized as sustainability) of a business. As mentioned above, even legislation is being enacted requiring disclosure of information on such matters.

Socially responsible investing has increased in the last few years, and there are rating companies collecting the information publicly available, such as in sustainability reports,  to  help investors avoid companies that (might) pose a financial risk due to their practices.

  • Environmental criteria could include: energy use, hazardous waste disposal, emissions, and ownership or acquisition of contaminated land[3].
  • Social criteria could include good health and safety conditions for workers both by employers and their suppliers.[4]

Companies that perform well in managing their EHS compliance and risks and that are proative in communicating their success will be targeted by investment firms and promoted as a good investment. Sustainability reporting contributes to the positive image and the good reputation of the company. It allows companies to integrate sustainability into its operations, for instance, in choosing suppliers, implementing processes to generate less waste, and in reducing water use. It can also help internally to improve employee welfare.

Companies that perform well in managing their EHS compliance and risks and that are proative in communicating their success will be targeted by investment firms and promoted as a good investment.

Additionally, sustainability reporting enables companies to identify opportunities and manage risks — for example, risks arising from climate change. It also helps companies find new growth opportunities. For example, some banks provide sustainability-linked revolving credits based on sustainability Key Perfrmance Indicators (KPIs)[5].

Challenges in sustainability reporting

Getting on board with sustainability reporting is a great idea, however, there are challenges to be aware of. Knowing these challenges in advance is helpful for overcoming them.

Investors have difficulty interpreting information in reports for decision making

A striking 92 percent of investors think that information provided in different sustainability reports is not comparable[6].  This is partly because companies can customize their report[7], in addition to the fact that not all of the companies use the same reporting framework (e.g. while some use the UN global compact, others might prefer the IIRC framework or a combination of frameworks). In addition, companies may use different methods for data calculation. The reporting frameworks address different stakeholders, posing a difficulty for companies to provide the right information for each stakeholder. This makes it difficult for invenstors to compare reports from different companies in a consistent fashion.

In order to solve this issue, there is an initiative called “the Corporate Reporting Dialogue,” which aims at aligning the reporting frameworks and avoiding potential conflict and inconsistency. The participants in the Corporate Reporting Dialogue include the GRI, the Carbon Disclosure Project (CDP), the Sustainability Accounting Standards Board (SASB), the ISO and the IIRC. These organizations have released documents regarding the materiality and alignment on climate-related reporting.

Although cultural differences among regions makes full standardadization difficult to reach, it is promising to standardize as much as possible. One way to do so is to provide quantitative data, and the context behind that data, so that reporting is as clear as possible.

Boilerplate language isn’t useful for this type of reporting

Sustainability reporting is not a “ticking of the box” exercise. Stereotyped statements with no quantitative information should be avoided. Qualitative information must be backed, where appropiate, with contextual information and quantitative information to compare the past, current, and future situations.

Companies need to have a measurable way to define their returns

Companies say that they receive little feedback from reporting[8]; consequently, they struggle in providing ESG information that is most relevant for stakeholders.  Key questions here are – did your report reach the stakeholders addressed? Was the information provided usable?

Establishing a closer relationship with stakeholder groups could result in more feedback[9]. The more that ESG criteria are embedded in other areas that affect a company’s lifecycle, the easier it will be to quantify the returns.

What you need to keep in mind about sustainability reporting

It is vital for global companies to keep sustainability top of mind as we look toward 2020 and beyond. Sustainbility and accompanying reporting is not a trend that is disappearing; instead it is gaining momentum.

Keep these things in mind:

  • Sustainability is here to stay: society, markets, investors, banks, individuals, and employees expect that companies report on or take proactive steps toward sustainability
  • Sustainability reporting is mandatory in certain countries (even for non listed companies such as in France)
  • There might be some challenges, but they can be overcome by producing thorough reports with adequate context for the information provided and that clearly identify and engage stakeholders.
  • A company is better off reporting than not reporting, since, in the end, it might already abide by the main principles in the reporting frameworks. Additionally, reporting allows companies to better identify areas of opportunity.
  • Sustainability reporting helps to establish transparent communication with stakeholders and can improve a company’s overall brand.

There is no time like the present to ask yourself what you can do to prepare sustainability reports in the new year.


Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups 

Lukomnik, Jon,2018Harvard Law school Forum on Corporate Governance and Finanancial Regulation. State of Integrated and Sutainability Reporting 2018, 3 December 2018 

World Business Council for Sistainable Development 2018. Corporate and sustainability reporting in Singapore and Southeast Asia 

US Chamber of Commerce Foundation 2019. Corporate Sustainability Reporting, November 2018 

D’aquila, Jill M., 2018. The CPA Journal. ICYMI The Current State of sustainability Reporting 

Network for Business Sustainability. Sustainability Reporting Roundtable: 9 Tips for Success 


[1] Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups (OJ 2014, L330/1)

[2] Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector (OJ 2019, L 317)

[4] Ibid.