Carbon reporting regulations

What you need to know

Reporting rules and regulations are far from finalized or globalized

Over time, numerous governing bodies have outlined carbon reporting standards. However, reporting rules and regulations are far from finalized or globalized. There is no universal standard or regulation, which makes it complicated for global organizations to understand exactly what to disclose. A few global organizations are at the forefront of this regulatory evolution.

^DEFINITIONS:
^CSRD^{- Corporate Sustainability Reporting Directive}
^ESRS^{- European Sustainability Reporting Standard}
^IFRS^{- International Financial Reporting Standards for Sustainability}
^ISSB^{- International Sustainability Standards Board}
^NFRD^{- Non-Financial Reporting Directive}
^TCFD^{- Task Force for Climate Financial Disclosure}

US/International - ISSB IFRS Standards

What: The ISSB has introduced new standards named IFRS S1 for sustainability financial reports. This will largely replace the familiar TCFD as the main standard for such reports.

Purpose: Develop a common language for disclosing the effect of climate-related risks and opportunities on a company’s prospects. It will likely be integrated into mandatory reporting requirements by many other regulators.

Audience: Although TCFD reporting has been mandatory in the UK for large companies since 2022, The UK recently announced its intention to mandate IFRS S1 standards. Note that many multinational companies are already using these standards.

Timeline: The ISSB is working with governing bodies and companies to support adoption.

European Union (EU) - CSRD

What: EU CSRD is based on the ESRS. It replaces the NFRD and expands the scope. Important: ESRS and ISSB IFRS standards have similarities but are not the same.

Purpose: Aiding business to communicate climate impacts clearly.

Audience: Major firms within and beyond the EU with significant EU operations.

Timeline: As early as 2025, the EU will require large and listed companies to disclose information (on 2024 data).

U.S - SEC Climate Regulations

What: Climate-focused regulations by the Securities and Exchange Commission.

Purpose: Urging US-listed business to share their climate-related concerns, supporting well-informed investment decisions.

Audience: US-listed entities. The SEC also proposes that climate-related disclosures would be required in registration statements, including those for IPOs.

Timeline: Development in progress; potential roll-out by 2024/2025.

Note: If operating globally, organizations may need to disclose according to different standards and regulators. Countries like Japan, China, Brazil, and Canada are also developing their own regulations.