During the 21st century, climate change has become a topic of increased international focus and urgency. Seeking to monitor and reduce greenhouse gas (GHG) emissions, governments and non-government organizations (NGOs) around the world have introduced sustainability reporting requirements. These non-financial reporting mandates primarily extend to large corporate entities whose shares are publicly traded on securities exchanges.
Recent research supports the need to hold major emitters accountable. According to data published in InfluenceMap’s Carbon Majors Database in April 2024, more than 70% of all carbon emissions since 1751 can be traced to just 78 corporations and states.
Arranged by country/region, this guide to sustainability reporting and emissions reduction standards explores the major programs and mandates in effect around the world.
Global Sustainability Reporting Programs
United States
Flagship U.S. national and federal programs include:
- Greenhouse Gas Reporting Program (GHGRP): Introduced in 2009 by the Environmental Protection Agency (EPA), the GHGRP requires major emitters, fuel providers, CO2 injection sites, and industrial gas suppliers to submit annual disclosures of their GHG emissions. As of 2024, the GHGRP’s sustainability reporting requirements cover approximately 8,000 businesses and organizations.
- Securities and Exchange Commission (SEC): In March 2024, the SEC implemented new, standardized climate-related reporting guidelines for publicly traded companies and businesses launching initial public offerings (IPOs). The new rules introduce hard requirements related to the broader ESG performance metrics voluntarily disclosed by 63% of publicly traded companies in 2023.
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Some U.S. states have also introduced their own sustainability reporting and emissions tracking requirements. In 2023, California passed three new pieces of climate disclosure legislation designed to make large emitters more accountable to the public. Experts believe other states may soon follow California’s lead.
European Union (EU)
The EU operates several sustainability reporting programs for GHG emissions, with the mandates extending to both member states and private entities. They include the European Sustainability Reporting Standards (ESRS) system, first adopted in 2014 as a functional replacement for its predecessor, the Non-Financial Reporting Directive (NFRD).
In January 2023, the European Commission formally adopted the Corporate Sustainability Reporting Directive (CSRD) to address some gaps and shortcomings in the ESRS. Together, the systems create an effective accountability mechanism for both GHG emissions in general as well as the Scope 3 emissions that comprise about 65% to 95% of all climate-related pollutants emitted by most companies.Â
The EU also uses a Climate Monitoring Mechanism, which requires member states to report their emissions of seven greenhouse gasses of concern. In addition, it continues to operate the EU Emissions Trading System (ETS), established in 2005 to create the world’s largest carbon market.
China
In 2023, China was the world’s largest single carbon emitter by a wide margin. Under increased international pressure to take action, China introduced new sustainability reporting requirements in 2024. The new rules will apply to large companies traded on the Shanghai and Shenzhen stock exchanges.
China’s move followed a program launched in 2022, which was designed to standardize the country’s ESG performance reporting metrics. The new policies followed public pledges by top Chinese government officials indicating the country’s commitment to reach peak carbon emissions by 2030 and to become carbon neutral by 2060.
Asia-Pacific
In Asia, emissions disclosure mandates mainly function under the International Sustainability Standards Board (IFRS) banner. Here’s how major players in the regional economy have responded to the June 2023 introduction of IFRS reporting requirements:
- Hong Kong: Hong Kong’s Green and Sustainable Finance Cross-Agency Steering Group has announced plans to align the polity’s financial markets with IFRS standards.
- Singapore: In July 2023, Singaporean officials initiated a public consultation as part of a broader plan to align the country’s financial system with IFRS standards across multiple phases beginning in 2025.
- Japan: Welcoming the IFRS standards, Japan indicated its intent to implement them under a system the country’s government hopes to finalize by March 31, 2025.
- India: Indian business and financial institutions including the Institute of Chartered Accountants of India (ICAI) began vetting the IFRS disclosure system immediately upon its initial release. However, it is unclear whether Indian decision-makers will consider the proposed IFRS system suitable for India’s economy.
- South Korea: South Korea’s Financial Services Commission (FSC) intends to develop its own sustainability reporting system based on IFRS principles. The FSC is also working towards implementing ESG performance disclosures by 2025 or 2026.
Elsewhere in the region, both Australia and New Zealand introduced their own sustainability reporting programs in 2024. In both countries, reporting requirements will extend to large, high-emissions private entities to make climate disclosures to prospective investors.
Global Programs
IFRS general requirements form the backbone of globally focused sustainability reporting systems. IFRS accounting standards are used throughout the world, with most of the 168 countries actively profiled by the organization committing to its programs. Those countries combine to account for over 98% of global gross domestic product, and they cover more than 29,000 companies traded on 93 leading security exchanges.
In May 2024, the IFRS and the European Financial Reporting Advisory Group (EFRAG) released interoperability guidelines. The groundbreaking development created a strong framework for helping EU-based companies meet both IFRS and ESRS reporting requirements. Â
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