Comparison of non-financial reporting standards: divergences and convergences

Comparison of non-financial reporting standards: divergences and convergences

The publication of non-financial reports is one of the new challenges facing companies. In addition to the increasing number of reports, there are also more and more. How do you find your way around, know which ones are mandatory, what they contain and whether they are interoperable? We'd like to give you a clearer picture by comparing the main standards to which companies are subject.

François Tréfois

François Tréfois

CSR & ESG Expert

30/1/2024

Non-financial reporting has become an integral part of companies' annual processes. Although these reports are relatively recent, they have been considerably enriched over the years and are becoming very demanding.

It's hard to miss them, however. Some are mandatory, such as the European CSRD, whose implementation begins on January 1, 2024, while others (CDP, GRI, ISSB) are at the company's discretion, but are becoming essential under pressure from numerous stakeholders, starting with customers and investors.

The proliferation of these reports ultimately leads to a proliferation of related standards. For CSR departments and CFOs, the first to be affected, this can quickly become a headache. Differences in the data to be collected, reporting formats and data processing requirements all call for a high level of involvement on the part of the teams concerned, and compiling these reports quickly becomes a time-consuming process.

In recent months, under the impetus of the CSRD, these different reporting standards have tended to converge. Nevertheless, differences persist, often linked to the origin of these reports and/or their final objectives.

To help you see things more clearly, we have drawn up a comparison of different non-financial reporting standards. In this article, you will find a cross-analysis of 4 major international standards frameworks: 

  • the CSRD (Corporate Sustainability Reporting Directive)
  • ISSB (International Sustainability Standards Board)
  • the CDP (Carbon Disclosure Project)
  • GRI (Global Reporting Initiative)

Different visions and processes

Each non-financial reporting framework has its own set of specific standards: 

  • ESRS for CSRD
  • IFRS S for ISSB
  • CDP questionnaires for CDP
  • GRI standards for GRI

With the exception of the CDP, which operates on a questionnaire system, these standards provide a framework for collecting and processing the various data that make up the extra-financial report.

Comparison of non-financial reporting standards
General comparison of non-financial reporting standards

The first question to be raised is whether these reports are mandatory or voluntary.

Of the four frameworks analyzed, only CSRD is mandatory for EU companies, as well as for non-EU companies with EU sales of €150 million or more.

Completion of the CDP and GRI questionnaires is voluntary. It should be noted, however, that the results of CDP questionnaires are regularly scrutinized and even required by international investors.

The ISSB has a more ambivalent stance. Although originally intended to be completed on a voluntary basis, some countries, such as Brazil and the UK, have made it compulsory.

As far as their scope of application is concerned, they are recognized internationally. The CSRD, on the other hand, concerns only the European Union. A European company operating internationally is therefore likely to have to complete several reporting formats.

Another key question is that of the materiality analysis to be carried out upstream of most reporting processes, with the exception of the CDP. While the CSRD and GRI require a double materiality analysis, i.e. financial materiality and impact materiality, the ISSB only requires a financial materiality analysis.

Finally, one point on which the standards all differ is that of the auditing of reports published by companies. While this is mandatory under the CSRD, it is not always the case under the ISSB (depending on the rules established by the countries that have made it mandatory). The CDP makes it mandatory only to obtain an A rating in its ranking. For the GRI, it is only recommended.

It should be noted that only the CDP offers a 4-level classification of companies according to their reporting results.

A wide range of applications

While climate change remains the core element of all these normative frameworks, almost all extra-financial reports have broadened their scope to include numerous ESG variables, now considered inseparable from environmental issues.

Scope of application of the various non-financial reporting standards
Scope of application of the various non-financial reporting standards

The environmental dimension

All reporting frameworks address the environmental dimension. Some have extended their analysis to new themes that go far beyond carbon emissions alone.

Coverage of environmental issues
Coverage of environmental issues

While the ISSB focuses on the purely climatic aspect, the CSRD, CDP and GRI have integrated variables that take the following subjects into account: 

  • energy
  • pollution
  • water resources
  • biodiversity
  • waste management

The CSRD and GRI also include standards dealing with the company's commitment to the circular economy.

The social dimension

To date, only the CSRD and the GRI include reporting standards dealing with social issues. While the ISSB plans to include them in the near future, the CDP has no plans at present to include these elements in its questionnaires.

Coverage of social issues
Coverage of social issues

In this area, GRI covers the widest range of topics.

The elements covered by the two standards include : 

  • diversity within the company
  • managing social dialogue
  • training policy
  • social protection for employees
  • employee health and protection policy
  • ...

The difference between the 2 frameworks lies in a number of criteria external to the company. The GRI takes into account the impact of the company's activities on local communities, the social assessment of its suppliers, and consumer health and safety.

On the other hand, unlike the CSRD, the GRI does not take into account the company's wage policy and its fairness.

The governance dimension

As with social responsibility, governance is a subject dealt with exclusively by the CSRD and the GRI. The ISSB has also announced that it is working on its integration.

Coverage of governance-related topics
Coverage of governance-related topics

The GRI has a comprehensive set of reporting standards in this area. Their standards cover : 

  • the fight against corruption and the distribution of bribes
  • lobbying
  • the company's purchasing policy
  • economic performance
  • marketing practices and compliance with labels
  • anti-competitive behaviour

The CSRD focuses on the first three topics.

Sector-specific analysis

Each reporting standard has published, or plans to publish, sector-specific standards, the aim of which is to adapt to the specific features inherent in certain business sectors. These sectors are often targeted because they have a significant impact on the climate (transport, agriculture, fossil fuel exploitation, etc.).

Sector-specific extra-financial reports
Sector-specific extra-financial reports

To date, the 77 SASB standards of the ISSB and the 17 specific CDP questionnaires cover the largest number of sectors. The GRI has 3 sector-specific standards and is currently developing 3 new ones.

On the CSRD side, 7 sector-specific ESRSs are currently being drawn up and should be published during 2026.

Towards interoperability of non-financial reporting standards

More and more companies are required to publish one or more extra-financial reports each year. There are many reasons for this: 

  • a strong commitment to environmental and social issues
  • pressure from stakeholders: customers, suppliers, investors, etc.
  • a restrictive regulatory framework

The risk with the proliferation of reporting standards is that companies will be less committed to compiling and publishing these reports, and will therefore settle for the minimum service.

Spending time compiling reports can also have an impact on the time a company will devote to combating the negative impact its activity may have on the various ESG criteria covered in these reports. In this case, we lose sight of the primary objective of these reports: to raise companies' awareness and encourage them to take action for the climate.

The organizations in charge of these standards are well aware of these issues, and are actively working to make their standards interoperable. The aim is to enable companies not to multiply their efforts to complete their various extra-financial reports, but rather to find synergies between them.

Interoperability of non-financial reporting standards
Interoperability of different non-financial reporting standards

To facilitate this interoperability, mappings have been created to match the data collected to the relevant categories in each type of report. In this way, you'll know that a data item X, collected as part of the ESRS climate CSRD, will correspond to one or more responses in the CDP questionnaire.

This mapping will also enable the most sophisticated data collection tools to provide you with turnkey reports for each reporting standard by fetching the data required to build them from the data you've collected.

In addition, these different standards are intended to feed off each other. For example, ESRS 1 states that companies may draw on the requirements of the GRI and ISSB standards if they wish to disclose additional information not required by the ESRS. IFRS S1 provides the same mechanism.

In conclusion, most standards are now interoperable, limiting the risk of double reporting. EFRAG, in charge of the CSRD's ESRS, has already announced high levels of interoperability with its three cousins, and published indexes to match information collected in the ESRS with IFRS, CDP questionnaires and GRI standards. The GRI has even gone one step further, explaining that any company disclosing information in the ESRS format is deemed to have reported in accordance with the GRI (which is not currently the case in the opposite direction). For its part, the CDP has announced that it is working on aligning its questionnaire with the ESRS and IFRS S.

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