Sustainability reporting is moving from a specialist disclosure exercise to a core feature of corporate accountability. Focused on social, environmental and climate-related information for annual reports and accounts, it is gaining momentum as governments, regulators and businesses align behind net zero and wider sustainability targets. COP30 in Brazil reinforced the need to scale climate finance for a just transition and strengthen greenhouse gas reduction commitments to 2035, supported by transparent reporting and accountability for how finance flows are measured and delivered.

This global focus has pushed sustainability reporting up the boardroom agenda by giving leaders a clearer view of sustainability-related risks and opportunities, including geopolitical volatility and wider polycrisis pressures, while strengthening transparency, trust and corporate reputation.

It also helps businesses connect sustainability performance with long-term value creation, turning reporting from compliance into a strategic management tool. Decision-useful information for investors can support access to capital and lower the cost of capital for companies managing these risks and opportunities effectively.

AICPA and CIMA’s latest report in collaboration with the International Federation of Accountants (IFAC), The State of Play: Sustainability Disclosure and Assurance, marks a turning point. Now in its sixth year, it shows reporting and assurance moving away from fragmented voluntary frameworks towards more structured, standardised and integrated disclosures, with growing adoption of regional and international standards.

The voluntary use and regulatory adoption of the International Sustainability Standards Board’s (ISSB) standards and European Sustainability Reporting Standards (ESRS) show how mandatory requirements are influencing corporate behaviour beyond their home jurisdictions. Assurance is also becoming central to credibility, with three-quarters of large global companies obtaining assurance over at least some sustainability disclosures.

UK remains ahead of the global curve

According to the report, 100% of UK companies sampled disclosed sustainability information for the past two years, while 86% obtained assurance in 2024, above the global average. The UK has moved beyond basic disclosure and is increasingly focused on their quality, reliability and decision-usefulness, catalysed by Task Force on Climate-related Financial Disclosures’ (TCFD) reporting requirements for the largest companies, LLPs and financial institutions. As requirements mature, the question will be less whether companies report and more whether disclosures are trusted, comparable and embedded in strategic decision-making.

Sustainability-linked investment

Investors increasingly use sustainability-related financial disclosures to understand how companies manage risks and opportunities, alongside environmental, social and governance impacts. They are also scrutinising commitments to targets such as net zero transition pathways and climate scenario analysis.

When global agribusiness and digital farming specialist Syngenta sought funding, for example, its initial US$3bn facility was increased by US$1.5bn. The additional investment was enabled by established sustainability reporting practices that gave lenders confidence in the company’s performance, governance and long-term resilience.

For finance leaders and boards, Syngenta’s sustainability-linked loan shows why credible reporting is central to capital access, not just compliance. Clear ESG disclosures and measurable sustainability KPIs can turn environmental commitments into greater investor confidence, stronger lending appetite and more affordable capital.

Where next?

The UK government will consider whether to mandate reporting against UK SRS S1 and UK SRS S2 for large private companies as part of its review of the Modernisation of Corporate Reporting. In parallel, the Financial Conduct Authority has proposed that UK listed companies, who are already reporting against TCFD anyway, must report against UK SRS S2, with a comply-or-explain approach for Scope 3 emissions. It is also proposing comply-or-explain reporting for other sustainability-related risks and opportunities under UK SRS S1. Companies may also face expectations for greater transparency around their net zero transition plans and sustainability report assurance.

The ISSB will also issue an exposure draft of a Practice Statement on nature-related risks and opportunities ahead of biodiversity COP17 in Armenia, complementing IFRS S1.

Alignment is key

Sustainability reporting and assurance have advanced quickly, from voluntary good practice to formal requirements, but global alignment remains unsettled. The main frameworks are the IFRS sustainability disclosure standards and the EU’s ESRS, while US state-level requirements draw on TCFD and share similarities with IFRS S2. Governments now face the challenge of converging, where practical, around standards that support comparability, investor confidence and global business needs.

For mature companies, the challenge is no longer indiscriminate sustainability disclosures but linking sustainability and financial performance in investor-grade reporting. That demands stronger cross-disciplinary skills and practical training.

Financial services show how much remains unfinished. Financed emissions are difficult to measure, the data often lags financial reporting as firms rely on their clients for this information, and yet these emissions are typically the majority of their overall greenhouse gas footprint. Sustainability-related financial reporting remains a work in progress.

Beyond optional

As sustainability reporting enters a new era, the shift from voluntary disclosure to mandatory reporting is accelerating worldwide. With governments driving regulatory change and investors viewing credible sustainability disclosures as an essential insight into long-term value creation, businesses can no longer treat reporting as a compliance exercise. Boards have an opportunity to embed sustainability measurement, reporting and accountability across the organisation, turning transparency into trust and competitive advantage.

Jeremy Osborn is vice-president, Management Accounting Innovation, Research & Development, at The Chartered Institute of Management Accountants (CIMA).