{"id":208051,"date":"2025-09-30T07:34:26","date_gmt":"2025-09-30T07:34:26","guid":{"rendered":"https:\/\/ibkrcampus.eu\/campus\/?p=208051"},"modified":"2025-09-30T10:37:54","modified_gmt":"2025-09-30T10:37:54","slug":"when-less-equals-more-rethinking-sustainability-reporting","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.eu\/campus\/traders-insight\/securities\/esg\/when-less-equals-more-rethinking-sustainability-reporting\/","title":{"rendered":"When less equals more: rethinking sustainability reporting\u00a0"},"content":{"rendered":"\n

Originally Posted 29 September 2025 – When less equals more: rethinking sustainability reporting<\/a><\/p>\n\n\n\n

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The efficient flow of information between companies and their investors is fundamental to modern shareholder capitalism. The variety of requests corporates receive, whether to meet regulatory obligations or other requests from investors for comprehensive, reliable and actionable information about corporate sustainability, risks turning a steady flow into a flood of requests that doesn\u2019t necessarily provide investors with the insights they need. <\/p>\n\n\n\n

The UK Government has been consulting on disclosures around climate-related transition plans<\/a> \u2013 a critically important component of corporate sustainability reporting. The consultation on transition plans was part of a suite of consultations sitting alongside two others on sustainability reporting standards (UK SRS) and assurance. The Government Consultations provide an opportunity to reconsider how companies can best meet the needs of their investors while addressing the growing reporting burden.  <\/p>\n\n\n\n

To help inform our position, LSEG together with the World Business Council for Sustainable Development (WBCSD), and the Principles for Responsible Investment (PRI), convened a group of leading companies and investors to discuss the sustainability reporting landscape.  Insights from our roundtable have helped inform this blog.<\/p>\n\n\n\n

Demand for reported sustainability data <\/h2>\n\n\n\n

Investors increasingly recognise that sustainability factors can have a material impact on companies\u2019 long term financial performance [Note1]<\/a>. As such demand for information about companies\u2019 sustainability management has spurred the creation of a variety of voluntary sustainability reporting frameworks and a growing body of mandatory reporting requirements \u2013 of which the EU\u2019s Corporate Sustainability Reporting Directive (CSRD), even when considering the upcoming EU simplification Omnibus Directive, is perhaps the most far-reaching.  <\/p>\n\n\n\n

The International Sustainability Standards Board (ISSB) is working towards achieving consistent global reporting standards rooted in the disciplines of financial reporting, with its IFRS S1 and IFRS S2 Standards, covering general sustainability-related financial information and climate-related disclosures respectively.<\/p>\n\n\n\n

Nonetheless, companies are subject to increasing requirements to track, collect, verify and disclose sustainability-related information. This creates cost and resourcing requirements. Based on our engagement with companies, a FTSE 100 company in its first year of reporting can find itself spending millions of pounds to put in place the systems, processes, and assurance services to meet both EU and UK sustainability reporting requirements. <\/p>\n\n\n\n

There are also questions around how digestible this information is for investors, when considering different data points, metrics, and formats for information. More information is being put in sustainability reports and given that some sustainability issues are financially material for companies, there is \u2013 quite rightly \u2013 a move towards including such information in their main annual report and accounts. This is contributing to a growing size of annual reports for FTSE 100 companies, which, according to the Quoted Companies Alliance (QCA) [Note2<\/a>], are now on average 237 pages long, with sustainability reports also often being somewhere between 50 and 100 pages.<\/p>\n\n\n\n

Annual reports and stand-alone sustainability reports now tend to combine information and data on sustainability performance metrics and updates from the prior 12 months with standing information such as sustainability policies and governance, which tends to be little changed from year to year.<\/p>\n\n\n\n

Transition planning and engagement <\/h2>\n\n\n\n

The transition to a low-carbon global economy is also creating demand for information. The Task Force for Climate-related Financial Disclosures (TCFD) first suggested companies describe their transition plans, providing guidance on the subject in 2021<\/a> [Note3]<\/a> that called on them to describe how they intend to adapt business models, investment plans and operations to align with its recommendations. <\/p>\n\n\n\n

The UK\u2019s Transition Plan Taskforce (TPT) was convened to set the \u2018gold standard\u2019 for transition plans, and its guidance \u2013 published in 2023 \u2013 has since been incorporated under ISSB\u2019s remit. <\/p>\n\n\n\n

LSEG has been closely involved in work helping to develop an industry framework for \u201creal economy\u201d companies\u2019 transition plans based on the expectations from financial institutions<\/a>. LSEG was a member of the UK\u2019s  Transition Plan Taskforce<\/a>, which took the previous framework and created clear guidance for corporate transition plans. <\/p>\n\n\n\n

We welcome the work of the ISSB, which recently published guidance on disclosing transition plans<\/a>. This incorporates TPT Guidance [Note4]<\/a>, in another step towards consistency in transition plan reporting. <\/p>\n\n\n\n

Getting this reporting right is important. Within our Index business,  FTSE Russell, we have seen a trend of passive and climate investing with growing demand from institutional investors to integrate climate risks and opportunities into index investment strategies [Note5]<\/a>. Despite this investor demand, in many sectors, transition plans underpinning these investment strategies are either non-existent or poorly communicated. At the same time, many companies we have engaged with say that that the quality of engagement they experience with investors is weak.<\/p>\n\n\n\n

The UK ponders next steps on transition plans <\/h2>\n\n\n\n

Meanwhile, the UK government initially set out proposals to introduce regulations requiring financial institutions and some of the UK\u2019s largest companies to \u201cdevelop and implement credible transition plans that align with the 1.5\u00b0C goal of the Paris Agreement\u201d. It is now undertaking a consultation to, among other things, ensure this commitment \u201cenhances transparency for investors and promotes efficient capital allocation\u201d [Note6]<\/a>.<\/p>\n\n\n\n

The consultation specifically asked whether and how frequently a standalone transition plan should be disclosed, \u201cin addition to transition plan-related disclosure as part of annual reporting\u201d. It also asks about \u201copportunities to simplify or rationalise existing climate-related reporting requirements\u201d.<\/p>\n\n\n\n

A new approach to disclosure (for larger companies)<\/h2>\n\n\n\n

Given the context outlined above we believe there\u2019s a case for rethinking how sustainability information, including transition plans, is disclosed. At the heart of this is a distinction between information that conveys sustainability performance over the preceding 12 months versus more forward-looking information about a company\u2019s climate transition plan.  This approach has four elements: <\/p>\n\n\n\n