What are global climate and ESG standards?

Global climate and ESG reporting standards have proliferated over the past decade, driven by growing investor demand for transparency, regulatory mandates, and the urgent need to address climate change. While overlapping in many areas, these frameworks serve distinct purposes—from guiding climate-risk disclosures to standardizing broad environmental, social, and governance metrics. Below is an overview of the most influential standards shaping corporate sustainability reporting today.

1. Task Force on Climate-related Financial Disclosures (TCFD)

Launched in 2015 by the Financial Stability Board, the TCFD provides voluntary recommendations to help companies disclose climate-related financial risks and opportunities across four pillars: Governance, Strategy, Risk Management, and Metrics & Targets. Its focus is on financial materiality—how climate change impacts a company’s balance sheet and cash flows—and it has been adopted by thousands of organizations worldwide. By standardizing the way entities assess and report on transition and physical risks, TCFD has become the de facto baseline for climate disclosure wtwco.com sustain.life.

2. International Sustainability Standards Board (ISSB)

Building on TCFD and the Value Reporting Foundation’s SASB metrics, the ISSB was created in late 2021 under the IFRS Foundation to establish a global baseline for sustainability reporting. Its two initial standards, IFRS S1 (General Requirements) and IFRS S2 (Climate-related Disclosures), require companies to report governance, strategy, and risk management regarding sustainability, with greater emphasis on investor-focused decision-useful information. Effective for reporting periods beginning January 1, 2024, these standards aim to harmonize disparate national requirements and feed into mandatory regimes over time ifrs.org freshfields.com.

3. EU Corporate Sustainability Reporting Directive (CSRD) and ESRS

The CSRD, which came into force in January 2023, represents the European Union’s expansion of mandatory sustainability reporting. Under the CSRD, companies must follow the European Sustainability Reporting Standards (ESRS), developed by EFRAG. ESRS adopts a “double materiality” approach, requiring disclosure of both how sustainability issues affect the company and how the company impacts society and the environment. Notably, ESRS mandates alignment with a 1.5 °C global warming scenario, going beyond TCFD’s 2 °C focus, and includes detailed social and governance metrics such as due diligence processes and human-rights impacts manifestclimate.com copliance.com.

4. Global Reporting Initiative (GRI) Standards

The GRI Standards, first published in 2000 by the Global Reporting Initiative, are the most widely used voluntary framework for comprehensive ESG reporting. They enable organizations to report on economic, environmental, and social impacts in a comparable and credible way. GRI places emphasis on stakeholder inclusiveness and materiality from a broad societal perspective. Recent interoperability efforts provide mapping guides between GRI and other standards, such as ESRS and ISSB, helping companies streamline multi-framework reporting globalreporting.org greenco-esg.sg.

5. Sustainability Accounting Standards Board (SASB)

Now consolidated under the IFRS Foundation’s Value Reporting Foundation, SASB developed industry-specific disclosure topics and metrics focused on financially material ESG issues. By integrating with TCFD and feeding into ISSB Standards, SASB’s metrics ensure consistency and comparability for investors assessing sector-specific risks, such as emissions intensity in utilities or labor practices in apparel. The joint GRI-SASB publication further guides companies on using these frameworks together to satisfy both investor and stakeholder needs sasb.ifrs.org globalreporting.org.

6. Taskforce on Nature-related Financial Disclosures (TNFD)

Recognizing that biodiversity and ecosystem impacts are often overlooked, the TNFD released recommendations in September 2023 to help organizations disclose nature-related dependencies, impacts, risks, and opportunities. TNFD’s framework mirrors TCFD’s structure—covering governance, strategy, risk management, and metrics—but extends to topics such as supply-chain biodiversity impacts, plastic pollution, and human-rights considerations. Over 320 organizations, representing more than $20 trillion in assets, have committed to pilot or adopt TNFD guidance, signaling its rapid emergence alongside climate standards reuters.com.

7. ESG Ratings and Regulatory Initiatives

Beyond reporting standards, myriad rating agencies (e.g., MSCI, Sustainalytics, Dow Jones Sustainability Index) evaluate corporate ESG performance based on proprietary methodologies. While these scores help investors benchmark companies, variation in scope and data sources can lead to inconsistencies. Simultaneously, regulatory bodies—such as the U.S. SEC, which is finalizing its own climate-risk rule—are moving toward mandatory disclosures, often aligned with TCFD or double materiality principles. These evolving regulations underscore the need for convergence to avoid reporting fatigue and ensure data comparability voguebusiness.com ft.com.

Conclusion
The landscape of global climate and ESG standards is rapidly evolving, balancing voluntary frameworks with mandatory regulations. TCFD laid the groundwork for climate disclosure, ISSB is driving global baseline alignment, while regional regimes like the EU’s CSRD enforce comprehensive double-materiality reporting. Voluntary standards such as GRI and SASB complement these efforts, and emerging frameworks like TNFD are broadening the scope to nature-related risks. As convergence efforts continue—through interoperability guidance, mapping tools, and regulatory harmonization—organizations can look forward to a more streamlined, comparable, and impactful sustainability reporting ecosystem.

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