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  • Dr Mark Aleksanyan

Standard-Setting for Sustainability Reporting

By Dr Mark Aleksanyan, University of Glasgow

The era of mandatory sustainability reporting is upon us. From 2025 more than 50,000 European companies will be required to prepare sustainability reports in accordance with the European Sustainability Reporting Standards currently developed by the European Financial Reporting Advisory Group (EFRAG). In addition, efforts are already underway to introduce standards that could form a global baseline of sustainability reporting. These standards are being developed by the recently established International Sustainability Standards Board (ISSB) within the International Financial Reporting Standards Foundation.

Despite being unified by the need to make businesses more transparent about their relationship with the environment and society, the regulatory work for mandating sustainability-related disclosures is underpinned by two different views about what information should be regarded material and to whom sustainability information should be reported. The ‘financial materiality’ view is promoted and adopted by the ISSB. This approach only promotes the disclosure of environmental and social risk and opportunities faced by companies (outside-in perspective). In contrast, the ‘double materiality’ view, adopted by the European Commission, necessitates the disclosure of information relating to companies’ impacts on society and the environment (inside-out perspective) in addition to financially material information. This view underpins the European Commission’s Corporate Sustainability Reporting Directive and the proposed European Sustainability Reporting Standards to operationalise the Directive. The double materiality approach responds to the needs of a broader set of stakeholders, unlike the investor-centric financial materiality approach.

The Sustainability Accounting, Management and Policy Journal recently published a special issue, which critically examines the current approaches to sustainability reporting standards setting. The six papers in this special issue discuss the differences in the target audience, scope, and approaches to materiality of the sustainability reporting standards proposed by the ISSB and the European Unions. The papers are generally critical of the ISSB colonising sustainability reporting and adopting a narrow focus on portraying economic reality when sustainability reporting standards can play an important role in shaping organisational reality for achieving sustainable development. Research reported in this special issue also prescribes ways of adapting to the new institutional demands resulting from the coexistence of different sustainability reporting regulations and standards and contributing to United Nations’ Sustainable Development Goals.

The special issue on standard-setting for sustainability reporting in Sustainability Accounting, Management and Policy Journal is guest edited by Subhash Abhayawansa from Swinburne University and Mark Aleksanyan and Yannis Tsalavoutas from the University of Glasgow. The guest editorial, which provides an overview of the topic and summarises the six papers constituting the special issue can be found at:


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