Standardization of sustainability reporting improves, but obstacles remain

An updated annual report describes global sustainability reporting as “transitioning from a fragmented landscape toward one that is increasingly structured, standardized, and integrated.”

However, the report notes that the transition “may continue to be challenged by shifting geopolitical and regulatory sentiment within some of the world’s largest economies.”

The report from the International Federation of Accountants (IFAC), and the AICPA and CIMA, The State of Play: Sustainability Disclosure and Assurance (Six-Year Trends and Analysis, 2019-2024), collected data from the 100 largest companies in six featured jurisdictions (including the U.S.) and the 50 largest companies in 16 other jurisdictions.

It found that 97% of companies disclosed some sustainability information in 2024, with 75% of companies obtaining some level of assurance, and 59% trusting audit firms as their assurance provider, up from 55% in 2023.

Ninety-five of the top 100 U.S. companies disclosed sustainability data in 2024, close to the global average but down from 100% in 2023. The U.S. remained ahead of the curve with 88% of disclosing companies obtaining some level of assurance, but that dropped from 90% the prior year. The U.S. continued to trend up in terms of percentage of sustainability-related assurance reports using audit firms — to 32% from 28% in 2023 and from 11% in 2019. But that remains far below the global average.

“The growing use of audit firms for sustainability assurance is a good sign for capital markets and investors,” Sue Coffey, CPA, CGMA, the AICPA’s CEO–Public Accounting, said in a news release. “Auditors have earned their reputation for trust and expertise, backed by strong education requirements and strict rules on independence and professional integrity.”

Sustainability reporting appeared set for a breakout year in the U.S. in 2024, with expectations that momentum would carry into an even bigger 2025. The SEC adopted its first climate reporting rules in March 2024, but legal challenges soon delayed the planned 2025 implementation. Last month, the SEC proposed rescission of the climate rules.  

In the report, Turkey stood as an example of how standardization can affect reporting and assurance trends. In 2024, 86% of the top 50 Turkish companies that disclosed sustainability data obtained some level of assurance – up from 67% the prior year – and 95% of assurance reports came from audit firms, soaring from 54% the prior year.

In 2024, Turkey implemented International Sustainability Standards Board (ISSB) standards – billed as the “global baseline” for sustainability reporting – and 96% of the Turkish companies in an analysis of 2024 company reports referenced the use or future use of ISSB standards. Globally, such mentions increased to 33% in 2024 from 16% the prior year.

Adoption of the ISSB standards hasn’t been a consideration in the U.S., where SEC standards were expected to be the closest thing to a baseline for sustainability reporting. Under a California law, many of the largest companies in the U.S. are set to report Scope 1 and Scope 2 greenhouse gas emissions by Nov. 10.

— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.