As ESG regulations rapidly develop, FTI Consulting is providing a quick summary of need to know updates across the globe.
Sustainability Reporting Standards
As ESG regulations rapidly develop, FTI Consulting is providing a quick summary of need-to-know updates from around the globe. This month we cover updates to sustainability reporting standards across Brazil, the EU, and Australia.
1. Brazil’s Securities and Exchange Commission (CVM) and Ministry of Finance to Require Sustainability Reporting
What do I need to know?
Brazil’s CVM and Ministry of Finance announced that public companies in Brazil will be required to report sustainability and climate-related disclosures against International Sustainability Standards Board (ISSB) metrics, starting in 2026.
What’s next:
Public companies and investment funds can start voluntarily reporting according to ISSB standards in 2024.
Required reporting will come into effect for public companies in 2026.
2. European Sustainability Reporting Standards (ESRS) delayed
What do I need to know?
The adoption of the sector-specific ESRS, initially scheduled for June 2024, was postponed by the Commission by 2 years. At the same time, the adoption of standards for non-EU companies was also delayed to June 2026.
What’s next?
The postponement allows companies to focus on integrating the first suite of ESRS
The European Financial Reporting Advisory Group (EFRAG) will use the additional time to continue finalizing sector-specific standards to only essential reporting obligations
3. Exposure Draft ED SR1: Australian Sustainability Reporting Standards – Disclosure of Climate-related Financial Information
What do I need to know?
The Australian Accounting Standards Board (AASB) released ED SR1, including three draft Australian Sustainability Reporting Standards (ASRS Standards):
ASRS 1: General Requirements for Disclosure of Climate-related Financial Information, developed using International Financial Reporting Standards (IFRS) S1 as the baseline but with a scope limitation to climate-related financial disclosure, instead of sustainability;
ASRS 2: Climate-related Financial Disclosures, developed using IFRS S2 Climate-related Disclosures as the baseline and incorporating Australia-specific content; and
ASRS 101: References in Australian Sustainability Reporting Standards, developed as a service standard that would be updated periodically to list the relevant versions of any non-legislative documents published in Australia and foreign documents that are referenced in ASRS Standards.
While these align largely with IFRS, some notable differences include:
Not including disclosures against relevant industry-based metrics and SASB Standards, claiming these are “US-Centric” and not wholly applicable to the Australian market
A more flexible approach to Scope 3 emissions reporting criteria
Mandating reporting from not-for-profits that meet the requirements
What’s next?
ED SR1 will close for comment after March 1, 2024.
Companies would be required to report in a phased implementation scheme, with companies in the first phase (Group 1) reporting annually after July 1, 2024.
Group 1 includes entities that are required to report under Chapter 2M of the Corporations Act and that fulfill two of the three thresholds:
Has over 500 employees
The value of consolidated gross assets at the end of the financial year of the company and any entities it controls is $1 billion or more
The consolidated revenue for the financial year of the company and any entities it controls is $500 million or more.
AND Entities required to report under Chapter 2M of the Corporations Act that are a ‘controlling corporation’ under the NGER Act and meet the NGER publication threshold.
Contact us: For further information on how your business can better navigate emerging ESG regulations, please contact Ben Herskowitz, Senior Managing Director, U.S. at [email protected]
The views expressed in this article are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.
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