Building block 2: Disclosure content

Definition: The information which must be disclosed by entities. The content can target only one or several ESG sub-dimensions (e.g. climate, deforestation, biodiversity, human rights, diversity), and can be qualitative and/or quantitative, contain specific key performance indicators (KPIs) or general information.

Overall recommendation: Our comparative analysis reveals that the focus of the SEC and ISSB on climate is currently too narrow to correctly assess, report and manage sustainability impacts and risks with comprehensive disclosure requirements. Also, the general standard of the ISSB is currently too superficial to fulfill the data needs for comprehensive analyses for investments and sustainable development. A certain level of rigour in providing information related to targets is needed to avoid greenwashing issues and to provide investors with precise data. Therefore, these standards should only mark the beginning of further complementary proposals.

Design choice: The disclosure must go beyond climate and include further sustainability issues, such as biodiversity.

Standard Evaluation

SEC The requirements on disclosure content incorporate climate-related information. We welcome that the proposal contains crucial climaterelated aspects but recommend expanding it to additional complementary proposals. Environmental disclosure requirements must go beyond climate. The specified disclosure content should also reflect environmental objectives such as deforestation, biodiversity, circular economy, pollution, effects on water, and also social topics including human rights and affected communities.

IFRS S1 & S2 (by ISSB) The requirements on disclosure content incorporate general information (S1) and the detailed climate information (S2). We recommend the ISSB to expand the disclosure requirements to go beyond climate and expand on sustainability issues to reflect environmental objectives including deforestation, circular economy, pollution, effects on water, and biodiversity, and also social topics including human rights and affected communities. We believe that the Appendix B (Industrybased disclosure requirements, derived from the Sustainability Accounting Standards Board (SASB)) can provide a suitable starting point.

ESRS (by EFRAG) The requirements on disclosure content incorporate a set of standards with sector and topical Recommendation

We welcome the holistic approach of the ESRS series. The standards specify disclosure requirements for a broad range of ESG issues, especially in comparison to the proposals by SEC and IFRS. We strongly encourage EFRAG to maintain the ambition for broader content coverage, as this is crucially needed to increase the availability of critical information for decisions in the face of today’s sustainability challenges.

standards,

23 which are partially still under development.

Design choice: The disclosure content should be specified in a manner that ensures meaningful, precise and comparable information.

Standard Evaluation

SEC

IFRS S1 & S2 (by ISSB) The proposal requires the disclosure of metrics on greenhouse gas (GHG) emissions for scope 1 and 2, and for if applicable or material, scope 3, based on the GHG Protocol’s concept of scope and its related methodology. We welcome that the proposed rule builds on existing well-developed reporting frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD) and standards such as GHG Protocol and recommend increasing the (industry-)specificity of required indicators and metrics such as those indicated in the SASB standards.

S1 does not require specific metrics, while S2 provides a specific appendix, which builds on the SASB standards’ metrics. We welcome that the S2 Appendix provides industryspecific metrics, but for S1 we recommend to further increase the specificity of the disclosure content, in particular through the provision of metrics that shall be disclosed.

ESRS (by EFRAG) The standards require entity specific materiality assessments (ESRS 2) and disclosures based on an extensive set of topical and sectoral disclosure requirements. We recommend specifying the disclosure requirements related to the materiality assessment further, and to add a list of per se material disclosure issues (meaning that [certain] firms must always disclose on specified sustainability issues). For the topical and sectoral standards, we recommend specifying quantifiable and codifiable metrics for disclosure requirements where these metrics provide meaningful information. Further, we recommend complementing those with clear instructions for their measurement to ensure comparability and validity.

Recommendation

Design choice: The disclosure content needs to incorporate GHG emission disclosure requirements with detailed and consistent metrics and calculations.

Standard Evaluation

SEC Scope 1 and 2 GHG emission metrics must be separately disclosed and expressed as disaggregated and aggregated constituent GHG emissions, and in absolute and intensity terms. Scope We welcome that the proposed rule would require a registrant to describe the methodology, significant inputs, and significant assumptions used to calculate its GHG emissions metrics and recommend to further

Recommendation

23 i.e. covering climate, biodiversity, circular economy (all taxonomy environmental objectives) and also include social- and governancerelated reporting