In a significant development, corporate Environmental, Social, and Governance (ESG) disclosure is set to become easier as two leading ESG reporting frameworks have decided to align their requirements. This move would enable thousands of firms, making first-time disclosures about their influence on humans and the environment, to experience reduced complexity.
The European Financial Reporting Advisory Group (EFRAG), a body responsible for developing the ESG reporting standards for the European Union, and the Global Reporting Initiative (GRI) have expressed that they would guarantee that reporting under one framework could be used to satisfy the mandates of the other. This alignment of parameters will introduce a “minimal additional compliance burden” for over 14,000 publicly traded and non-listed firms that are currently voluntarily reporting their societal and environmental impacts.
This development will not only simplify compliance for the companies but also reinforce the importance of ESG factors in corporate performance and valuation. It is hoped that this move will motivate more corporations to embrace ESG disclosures, thereby ushering in an era of increased corporate transparency and responsibility.
This information was provided by Bloomberg Law.