Q&A with Kōan: Global trends and challenges in sustainability reporting

As sustainability regulations continue to evolve across regions, companies are grappling with new opportunities but also growing complexities.

In this Q&A, Melina Gkiolma, Sustainability Consultant at Kōan, explains global trends in sustainability regulations. She discusses the EU’s CSRD revisions, emerging sustainability frameworks in Asia and the move toward simplification. She also shares her perspective on how to best move ahead with uncertainties in regulation. 

What trends are you seeing in sustainability reporting across the EU, US, Asia and other regions, and what factors are driving these changes?

Melina: A trend is definitely simplification. Overall, the major pushback in sustainability started around the time when Trump was elected in the US. As a world power with influence over the global economy, his worldview on sustainability and sustainability reporting has shaped the way many countries are operating. So I would say the US is the initiator of this simplification trend, which has, because of geopolitics, also dragged the EU, Canada and some Asian countries into this approach. 

That’s not to say simplification shouldn’t happen — it is welcome — but in some cases, it feels like initial laws are being disregarded, delayed or watered down, which is concerning. 

Do you expect more global convergence in reporting standards, or will regional differences remain strong?

Melina: There's definitely going to be convergence. We already saw this with the ESRS simplification proposals that EFRAG put forward for consultation — they are clearly trying to bring ESRS closer to ISSB standards. For example, they introduced the “undue cost or effort” principle we know from ISSB. 

Overall, I think the goal is to simplify reporting and bring standards closer together, so that companies operating in multiple jurisdictions can adopt a more consistent approach.

What are the pros and cons of convergence in reporting standards for multinational companies? 

Melina: The clear pro is that if you’re a global company operating under multiple jurisdictions, your reporting will more or less remain the same across them. That reduces the reporting burden because you can adopt one centralised approach.

The downside is that sustainability reporting may not progress as fast. We’ve seen huge changes in the past 15 years precisely because new standards and regulations pushed reporting forward. If all jurisdictions converge and stick to the same baseline, we risk not taking the next step. This was actually a key issue between ESRS and ISSB: ESRS initially had more requirements, but convergence meant narrowing down and losing some of that progress.

Which markets outside the EU are showing the most momentum toward mandatory sustainability reporting, and why do you think this is?

Melina: Many EU countries are leading in sustainability reporting, with ESRS still more detailed than ISSB or other standards. Scandinavian countries, for example, published very comprehensive reports last year.

Outside Europe, we’re seeing movement across Japan, Singapore and China, which have all introduced sustainability reporting standards. So far, we haven’t seen many talks of simplification in this region. It will be interesting to see whether they will take this opportunity to advance while the rest of the world is simplifying its approach.

Is there any guidance you would offer to large and small companies navigating reporting while going through regulatory changes?

Melina: Focus on your sustainability strategy because this will ultimately drive reporting. At the same time, it’s important to stay up to date. Use reliable sources to track what matters for your company and then dive deeper once rules become official. For example, we have a weekly newsletter that summarises key updates from the global sustainability landscape.

For smaller companies outside the CSRD scope, develop a strategy and, if reporting, use voluntary frameworks like GRI or ESRS in a way that fits your resources. There are many free resources provided by organisations like EFRAG and GRI that have detailed guidance on regulatory changes.