The international sustainability reporting landscape is undergoing significant changes in 2023, 2024 and 2025, as standardization bodies and regulators such as the International Sustainability Standards Board (ISSB) and Authorities in the European Union and the United States are actively incorporating sustainability reporting frameworks into legislation and are consulting on proposed requirements. This dynamic development highlights the growing global momentum towards standardized and mandatory disclosure of environmental, social and governance information by companies.

The European Union: Simplification and Enlargement

The European Union is at the forefront of these changes, with European Sustainability Reporting Standards (ESRS) have been formally incorporated into EU law. However, the revised ESRS proposals are still under discussion and scrutiny, with the European Financial Reporting Advisory Group (EFRAG) due to deliver its technical opinion by 30 November 2025. EFRAG has been mandated by the European Commission (EC) to simplify the ESRS, which includes reducing the number of mandatory data points, clarifying the materiality provisions and guidance, simplifying the structure of the standards and improving interoperability with global standards. The public consultation on this simplification has been extended to 60 days, from end-July to end-September 2025.

In addition, the EC published its first report in February 2025. omnibus package of proposals, which aims to simplify and streamline reporting requirements, while maintaining transparency and consistency with the European Green Deal. The EU Council has already agreed its position on these proposals. Key changes include adjusting the scope of the Corporate Sustainability Reporting Directive (CSRD), including entities with more than 1,000 employees and a net turnover of over EUR 450 million (originally EUR 50 million). Amendments are also proposed to the Corporate Sustainability Due Diligence Directive (CSDDD), increasing the scope to entities with more than 5,000 employees and a net turnover of EUR 1.5 billion, and bringing forward the transposition deadline of the CSDDD by one year to 26 July 2028. European Securities and Markets Authority (ESMA) issued a public statement on the oversight of the ESRS, highlighting the commitment to transparent reporting and reducing the risks of greenwashing, while acknowledging the uncertainties caused by parallel implementation. The EC also took measures to simplify the application of the EU Taxonomy Regulation.

United States: California Initiatives and SEC Abeyances

In the United States, despite ongoing legal challenges, the state of California is actively seeking to implement its climate disclosure laws. California Air Resources Board (CARB) is working intensively to develop regulations by the end of 2025 under California's climate disclosure rules SB 253 and SB 261Although the letter of SB 253 sets the deadline for the adoption of implementing regulations as July 1, 2025, CARB has made it clear that it is actively working to complete them by the end of 2025.

• SB 253 (Corporate Climate Data Accountability Act) applies to public and private U.S. companies with total annual revenues of over $1 billion that do business in California. Annual reporting of Scope 1, Scope 2, and Scope 3 emissions is required, with the first reports for 2025 (Scope 1 and 2) due in 2026 and for 2026 (Scope 3) due in 2027. CARB has issued an enforcement notice stating that it will not impose penalties on companies that demonstrate good faith efforts in the first reporting cycle in 2026.
• SB 261 (Greenhouse Gases: Climate-Related Risk) applies to public and private U.S. companies with total annual revenues of more than $500 million that do business in California. These companies must disclose climate-related financial risk reports that are consistent with the Task Force on Climate-related Financial Disclosures (TCFD) framework every two years. The first report is due on January 1, 2026. In addition, California law AB-1305 on transparency of voluntary carbon offsets, which entered into force on 1 January 2025, requires companies trading carbon offsets or using them with “net zero” claims to publish detailed information on their websites.

At the federal level, U.S. Securities and Exchange Commission (SEC) announced in March 2025 that it would no longer uphold the climate disclosure rules adopted in March 2024, effectively suspending their enforcement. The rules are currently in “abeyance,” meaning they are not currently being enforced, but are not repealed or removed.

International Standards Integration (ISSB)

ISSB standards (IFRS S1 and IFRS S2) are considered the “global baseline” for sustainability-related financial disclosure and are expected to be adopted and/or adapted by many jurisdictions around the world.

• Malaysia will implement IFRS S1 and IFRS S2 for major market participants from 1 January 2025, for other major market participants from 1 January 2026 and for companies listed on the ACE market from 1 January 2027.
• China is working on national standards based on the ISSB standards, with the aim of implementing a basic standard and a climate standard by 2027. The current standard is voluntary for now.
• Pakistan announced a phased adoption of the ISSB standards, with the largest listed entities required to begin implementing them from July 1, 2025.
• United Kingdom is currently conducting a consultation on UK Sustainability Reporting Standards (UK SRS), which are based on the ISSB standards, with a view to considering mandatory reporting.
• Canadian Sustainability Standards Board (CSSB) issued the first Canadian sustainability disclosure standards (CSDS 1 and CSDS 2) aligned with global frameworks, which are currently voluntary.
• Sustainability Standards Board of Japan (SSBJ) has issued its first three sustainability disclosure standards, which are aligned with the ISSB standards but include certain jurisdiction-specific features. They are expected to be mandatory for entities listed on the Main Market of the Tokyo Stock Exchange.
• Hong Kong published a plan for mandatory sustainability disclosures, with main market issuers required to report on climate under IFRS S2 from 1 January 2025 on a “comply or explain” basis, and full alignment with the Hong Kong Sustainability Standards (HKFRS S1 and S2) effective from 1 August 2025.
• Brazil will make CBPS standards (aligned with IFRS S1 and S2) mandatory from 1 January 2026.
• Qatar introduces changes to align with IFRS S1 and IFRS S2, effective from 1 January 2026 for category A companies.
• Kenya has a plan for mandatory adoption of IFRS S1 and IFRS S2 for public interest entities from 1 January 2027, for large enterprises from 1 January 2028, and for small and medium-sized enterprises from 1 January 2029.

These broad activities across jurisdictions highlight a common goal – to increase transparency, comparability and accountability in sustainability reporting around the world, albeit with different approaches and timeframes. The dynamics of these changes suggest a constant need for companies to monitor and adapt to evolving requirements. JRi