MIT Sloan Management Review Article on Get Ready for More Transparent Sustainability Reporting

Rigorous sustainability-related financial disclosure is coming. The era of inconsistent, voluntary disclosure is giving way to mandatory reporting — but don’t treat this regulatory revolution as simply an exercise in compliance. It is instead essential work to gain greater visibility into your business’s exposure to risk and long-term prospects for success — for the benefit of both investors and management.

Action has been brisk this year on the regulatory front. The U.S. Securities and Exchange Commission (SEC) plans to issue its climate disclosure rules by the end of 2023. In June, the International Sustainability Standards Board (ISSB) issued its first global standards; the European Union issued its European Sustainability Reporting Standards (ESRS) in August. The ESRS reporting requirements will be mandatory for large European companies starting in 2024 and in due course for international companies with European operations. Corporate reporting hasn’t changed this much since the SEC was created in the wake of the 1929 stock market crash.

About the Author

Richard Barker is a full-time member of the International Sustainability Standards Board, on leave from the University of Oxford’s Saïd Business School. This article expresses the personal views of the author, not the official positions of the ISSB.

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