Defining Issues| December 2022


Comparing ESG reporting proposals

Updated: Top 10 Q&As on how the ISSB proposals compare to the EU draft standards and the SEC’s climate proposal.

Julie Santoro

Julie Santoro

Partner, Dept. of Professional Practice, ESG, KPMG US

+1 212-954-1086

Maura Hodge

Maura Hodge

ESG Audit Leader, KPMG US

+1 803-606-8370

There are currently three sets of standards or regulation that could set the foundation for future ESG reporting from the International Sustainability Standards Board (ISSB), the SEC and the European Financial Reporting Advisory Group (EFRAG) in the European Union. All of the proposals have multi-jurisdictional implications. Our Top 10 Q&As have been updated to reflect latest developments from the ISSB as it redeliberates its proposals, and EFRAG’s release of the first set of 12 draft standards that are now before the European Commission.


SEC: Release Nos. 33-11042 and 34-94478 The Enhancement and Standardization of Climate-Related Disclosures for Investors

ISSB: Exposure Draft IFRS S1 General Sustainability-related Disclosures and Exposure Draft IFRS S2 Climate-related Disclosures

EFRAG: Draft European Sustainability Reporting Standards

Key impacts

Sustainability reporting continues to develop at a fast pace. In March 2022, the ISSB released its first two proposed standards, aiming to create a global baseline for investor-focused sustainability reporting that local jurisdictions (e.g., the US and the EU) can build on. In parallel, the SEC and EFRAG released separate proposals. In November 2022, following redeliberation based on feedback received, EFRAG submitted its first set of draft standards to the European Commission for approval.

“I am hopeful that a global baseline for ESG reporting – with individual jurisdictions considering what incremental disclosures are required rather than reinventing the wheel – is within reach. Right now, there is so much positive momentum and unprecedented collaboration among standard setters and regulators. And collaboration is how we achieve a workable global baseline.”

— Scott Flynn, KPMG US Audit Vice Chair

What’s the issue?

  • There is commonality between the proposals – including that the Task Force for Climate-related Financial Disclosures (TCFD) framework forms a shared input.
  • However, there are also areas where they are not aligned, which may create practical challenges for companies trying to design coherent and consistent reporting that meets the needs of both global investors and jurisdictional requirements. In addition to points of detail, this includes the greater scope and scale of the EFRAG proposals with their wider stakeholder focus.

What's the impact?

  • The proposals are ambitious and would have a significant impact on companies. 
  • For multinationals and others needing to apply multiple frameworks, the challenges will be magnified if the requirements are not compatible. A key practical consideration is aligning calculation methodologies – minimizing the different data requirements.
  • Achieving a global baseline would support companies in applying the standards, as well as drive consistent reporting across jurisdictions – reporting that is internationally comparable, but also meets local (including US) needs.

What's next?

  • Understand where similarities and differences exist between the proposals that may affect you.
  • Identify what you will be required to report versus what you may choose to adopt.
  • Prepare for fast adoption of all requirements that may affect your company.

See our responses to the consultations from the ISSB, SEC and EFRAG on their respective proposals.

Top 10 questions

We answer these questions about the three sets of proposals:

  1. At a glance, how do they compare?
  2. Who would be in scope?
  3. What materiality lens would apply?
  4. Where and when would information be disclosed?
  5. How do the proposals align with the TCFD?
  6. What industry-specific disclosures would be required?
  7. What GHG emissions reporting would be required?
  8. When would they be effective?
  9. What assurance would be required?
  10. What do you need to do now?

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