Unlocking a single sustainability report for ESRS & ISSB Standards

2.  Achieving a single‑report approach

ISSB and ESRS are built on a set of common principles such as fair presentation and are largely consistent in their requirements. Their comparable structures and terminology enable organizations to develop a single analytical basis that can support multiple reporting frameworks. 

Several key aspects are common across both frameworks and identified as interoperable, including:

• Fair presentation: both the ISSB Standards and the draft revised ESRS incorporate a fair presentation principle, requiring a complete, neutral and accurate depiction of material information about sustainability-related risks and opportunities and, under ESRS, impacts. This principle also requires disclosures to be comparable, verifiable and understandable, with additional or entity-specific information provided where application of the standards alone is insufficient.
• Climate‑related disclosure requirements: almost all ISSB climate disclosure requirements have corresponding requirements in ESRS, including those for disclosing the transition plan, if it exists. For topics other than climate, ISSB Standards refer to ESRS as a source of guidance that may be considered for identifying material information.
  
• Structure and terminology: both frameworks use consistent terminology and share similar disclosure structures. Therefore, entities can start with either ISSB Standards or ESRS and still satisfy core requirements of the other, although additional disclosures will be required.

However, entities aiming for a unified single-report approach still face several practical challenges. Some of the challenges and attention points that organizations must navigate when implementing both frameworks include:  

1. Materiality - financial vs. double materiality
2. Topic-specific disclosure requirements
3. Jurisdictional requirements and assurance
4. Industry-specific disclosures (use of SASB Standards)
5. Reliefs and proportionality
6. Resilience and scenario analysis
7. Organizational boundaries approaches
8. Anticipated financial effects
9. Use of the Greenhouse Gas (GHG) Protocol
10. Gross vs. net approaches in the identification of risks and opportunities

These areas will receive a further detailed analysis in future articles.

3.  Steps toward implementing a single-report approach

Multinationals intending to report under ISSB Standards and ESRS can take proactive steps to enable a single-report approach.

Refer to our publication for these steps that entities should reassess periodically (pdf).

For ISSB passporting to work in practice:

• Regulatory acceptance is required in each jurisdiction; jurisdictional authorities must formally agree to recognize ISSB-compliant reports as sufficient for their own reporting requirements.
• The report must ensure that financially material investor-relevant information is clearly identifiable and not obscured by additional local disclosures or requirements.
• ISSB passporting does not eliminate the need for companies to monitor local developments, as some jurisdictions may still require supplemental disclosures or have unique assurance requirements.

In essence, ISSB passporting is intended to simplify global sustainability reporting by enabling a “report once, use many times” approach, as long as the information relevant to primary users remains clearly identifiable. While it is unclear if and how ISSB passporting can be applied when also reporting on ESRS, it is an interesting development for multinational entities operating in multiple jurisdictions with sustainability reporting requirements.

Contributors:

Tomomi Eguchi, Senior Manager, Global Corporate Reporting Services, Ernst & Young LLP
Astrid Bessler, Senior Manager, Global Corporate Reporting Services, Ernst & Young LLP