Major businesses are opting to prepare sustainability reports according to more than one framework, according to new research.

Proxy adviser ISS looked at 71 corporates to find that 90% say they are using, or plan to use, more than one system for making non-financial disclosures on issues such as carbon emissions.

They also say their leading priority when choosing software to compile their reports is the audit trail and data validation.

Writing for the Harvard Law School governance blog, ISS STOXX global head of communications Subodh Mishra says sustainability reporting has become widespread as corporates across the world manage stakeholder expectations, regulatory mandates and alignment with different reporting frameworks.

“As they strive to meet these needs, sustainability reporting teams seek ways to standardise and streamline their approach, ensuring efficiency in data gathering, relevance, accuracy and traceability of sustainability information shared with stakeholders.”

Frameworks of choice

The survey, which examined 52 US companies and 17 in the EU, found that frameworks from the Sustainability Accounting Standards Board (SASB) and TCFD (Taskforce for Climate-related Financial Disclosures) were the two most popular systems, with the Carbon Disclosure Project (CDP) coming in third.

The International Sustainability Standards Board (ISSB) has incorporated SASB and TCFD into two new standards, IFRS S1 and S2, for use internationally.

ISS says the widespread use of SASB and TCFD “suggests likely broader voluntary adoption of the IFRS sustainability disclosure standards issued by the ISSB”.

When it comes to picking a computer system to manage non-financial disclosures, the priority is the audit trail first, then its ability to cope with multiple reporting frameworks and, in third place, effective integration with existing internal systems. Companies rate “gap analysis” eighth among their priorities.

The survey comes at a time when there is much political tension about sustainability reporting.

In Brussels, the EU is currently reviewing provisions in the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) as part of an “omnibus” process intended to cut the number of companies subject to the reporting obligations and ease the regulatory burden.

The move follows a report last year on EU competitiveness written by former European Central Bank president Mario Draghi. In the report, Draghi took aim at the sustainability reporting laws. “The EU’s sustainability reporting and due diligence framework is a major source of regulatory burden magnified by a lack of guidance to facilitate the application of complex rules and to clarify the interaction between various pieces of legislation.”

Rules dumped by Trump

Meanwhile, Donald Trump’s arrival in the White House saw the end of attempts to introduce mandatory climate reporting rules via new regulation from the US Securities and Exchange Commission.

Republican and right-wing politicians in the US have also taken offence at the extraterritorial nature of the EU rules, which dictate that foreign-owned businesses operating in the EU that fall within scope must comply with the rules.

In March, Bill Hagerty, a US senator, proposed a new law, the PROTECT Act, which would prohibit US companies from complying with “foreign” sustainability rules. “The European Union’s ideologically motivated regulatory overreach is an affront to US sovereignty,” he said.

Elsewhere, the US Chambers of Commerce has written about both CSRD and CSDDD that they were “not justified from a legal or market standpoint”.

Despite the political rhetoric, Reuters reported that “most” US companies “stepped up” their sustainability reporting efforts last year.

Sustainability reporting will remain politically controversial, although the direction of travel—companies choosing to issue sustainability reports—seems to be set. The only question is the quality of reporting and whether it will work in helping to counter climate change.