• Point of view

Shaping the future of sustainability reporting: Genpact's response to ISSB's S1 and S2 exposure drafts

Genpact partnered with The B Team to take the voice of industry to IFRS

Businesses are seeing an increased push of interest from customers, investors, regulators, and communities for companies to measure, report, and improve their ESG impact. As demand for investor-grade data and reporting for sustainability has grown, various global bodies such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), and the Taskforce on Climate-Related Financial Disclosures (TCFD) have released sustainability reporting standards that organizations can adopt. In addition to the above voluntary guidelines, there are jurisdictional regulatory reporting guidelines such as the US SEC climate proposal and the EU ESRS that have proposed mandating sustainability disclosures.

Mindful of the need to simplify the sustainability reporting landscape, the International Financial Reporting Standards (IFRS) Foundation set up the International Sustainability Standards Board (ISSB) during COP26 in Glasgow with the aim of establishing a baseline for sustainability reporting standards that can apply globally.

To this end, the ISSB released Exposure Drafts S1 (General requirements for disclosure of sustainability-related financial information) and S2 (Climate-related disclosures) in March 2022 and welcomed feedback from stakeholders to shape the final draft of the standards.

In response, Genpact – in collaboration with The B Team, a global collective of business and sustainability leaders – adopted a multipronged approach to capture the industry's view on the S1 and S2 exposure drafts. The voice of industry captures feedback on the proposed standards from 20 finance and corporate sustainability leaders from 16 enterprises.

Genpact's submission is a thematic aggregation of the discussion points and focuses on five themes across IFRS S1 and S2. Developed with a view to helping build standards that are practical, fit for purpose, and easy to adopt, the paper aims to identify areas that require more clarity or guidance on whose implementation might prove onerous compared to its potential value. The five themes revolve around:

  1. The definition of materiality and its application from a stakeholder and jurisdictional reporting perspective
  2. The timing and accounting treatment for reporting Scope 3 emissions, the relevance of materiality thresholds, and the methods for assessing their applicability
  3. The feasibility of reporting greenhouse gas (GHG) emissions intensity for Scope 1, 2, and 3 emissions expressed as metric tonnes of CO2 equivalent per unit of physical or economic output
  4. The tracking and reporting of emissions data at the national level with origin tagging
  5. The recommended timelines for applicability and the adoption of the proposed standards

“Building the capability to deliver robust sustainability reporting is a critical business imperative today. How can businesses access and process sustainability-related data across their internal and external business value chains? The answer lies in creating an ecosystem of a strong data infrastructure, bringing on board domain expertise to deal with multiple global regulations, and orchestrating inter-functional collaboration within the organization and third party landscape to facilitate capturing and reporting of investor-grade ESG information," says Subhashis Nath, service line leader, enterprise risk and compliance at Genpact.

Download our response document for industry leaders' perspectives on building sustainability standards that work for businesses and their stakeholders.

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