Perspective

06 Jun 2025

5 minute read

The Pulse Blog

Sustainability reporting trends to help navigate a rapidly evolving landscape

By Kristen Sullivan, Audit & Assurance partner, Sustainability Services, Deloitte & Touche LLP

Talking points

Despite the evolving global regulatory landscape, the business case for sustainability may still be important for many companies.
Thorough materiality analysis can be helpful to understand sustainability risks, opportunities, and time horizons for accountability and integration into the business strategy.
Governance and capacity building can strengthen adaptability in the face of evolving market expectations, uncertainty, and regulation.

In the fast-moving world of sustainability reporting, the only constant seems to be continuous change. What are some recent examples? They include the European Commission’s (EC) Omnibus proposal, the rapid rollout of the International Sustainability Standards Board (ISSB) standards in more than 35 jurisdictions around the world, and the launch of important new assurance and ethics standards by the International Auditing and Assurance Standards Board (IAASB) and International Ethics Standards Board for Accountants (IESBA).

In light of this evolving sustainability policy and regulatory environment, I’d like to share some reasons for staying the course, adapting your sustainability priorities, and leveraging the potential strategic value of sustainability in the face of continuous change.

Materiality takes center stage

Let’s start with materiality, which has long been important to sustainability reporting. Global sustainability reporting is intended to provide transparency into material performance matters that drive business performance, decision-making, and the bottom line.1 The EU’s Corporate Sustainability Reporting Directive (CSRD) regulation and the European Sustainability Reporting Standards (ESRS) added double materiality assessments to the mix, measuring environmental impacts like climate risk and biodiversity loss as well as financial risks and opportunities related to these matters. Many US companies continue to prioritize these EU materiality requirements.

In addition to the November 2024 ISSB Materiality educational material, focused on financial materiality, and the May 2024 EFRAG Materiality Assessment Implementation Guidance 1, focused on impact and financial materiality, we expect additional guidance to help companies navigate and capture efficiencies in sustainability materiality, governance, measurement, and reporting, and to prepare such information for assurance. Strengthening sustainability materiality assessments can enhance preparedness for evolving global regulatory requirements.

Taking charge of sustainability frameworks

In Deloitte’s 2024 sustainability survey, 50% of executives said that dealing with a lack of consistent industry standards to consistently measure is one of their biggest challenges.2 Focusing on broadly adopted standards and frameworks for measuring and reporting material sustainability matters can help navigate varying and evolving sustainability regulations worldwide. These standards include:

ISSB, which incorporates the Task Force on Climate-related Financial Disclosures (TCFD) recommendations that are overseen by the IFRS Foundation, the TCFD’s governing body.
Greenhouse Gas (GHG) Protocol, which is the leading GHG emissions measurement and reporting standard that’s referenced across various global regulations.
ESRS, which will be revised and simplified under the Omnibus proposals. Organizations are encouraged to look the VSME, the voluntary reporting standards for small and midsize enterprises, to understand the minimum disclosure expectations across organizations.

The new IAASB and IESBA standards provide a companion set of assurance, independence, and ethics guidelines. Similar to the ISSB reporting standards, these standards serve as a global baseline for sustainability assurance for practitioners around the world and provide transparency and consistency in the delivery of sustainability assurance engagements.

The strategic value of sustainability

With a thorough materiality assessment as a starting point, the strategic value of sustainability may still make sense for many companies. Organizations with a sustainability-focused culture often embed sustainability data and decision-making into their strategy, aligning with financial performance. This integration can yield benefits such as increased adoption of sustainability practices, greater accountability, and improved achievement of sustainability goals. It can also enhance operational resilience and efficiency, reduce business risk, and lead to better financial outcomes.

Sustainability capacity building

Sustainability capacity building can help embed sustainability into corporate strategy to achieve these goals. By investing in capacity building, companies can enhance their sustainability talent and capabilities, which are important not only for meeting evolving requirements but also for providing technical analysis and insights to inform strategic decisions.

The importance of governance to sustainability progress

During a period of change and uncertainty, the board and audit committee in particular can play important roles in integrating sustainability and business strategy and generally navigating the shifting landscape. This includes overseeing disclosure consistency, making judgments around enhanced or evolving reporting standards, and managing sustainability risks and opportunities for the business.

Near-term considerations

In a rapidly evolving sustainability environment, it’s important to keep your ear to the ground and stay abreast of the latest developments. Here are some actions you may want to consider:

Capitalize on efforts in preparation for CSRD to accelerate preparedness for ISSB requirements, which are currently being adopted around the world.
Monitor developments with US state climate disclosure requirements (e.g., California).
Use the Omnibus extended adoption timeline to enhance data, processes, systems, and controls as well as regulatory and assurance readiness.
Reevaluate whether EU subsidiaries and groups are still within the scope of the CSRD and EU taxonomy.

What role can Deloitte play?

While integrating sustainability goals into your strategic planning and reporting may be challenging, Deloitte can advise on ways to improve the process. Our recent Deloitte Insights article offers insights into how climate risks, stakeholder demands, and the net-zero transition can drive business transformation. You can also visit our Deloitte Accounting Research Tool (DART) site for up-to-date information on sustainability reporting trends and guidance. Don’t hesitate to reach out to me with any questions.

“By investing in capacity building, companies can enhance their sustainability talent and capabilities, which are important not only for meeting evolving requirements but also for providing technical analysis and insights to inform strategic decisions.”

—Kristen Sullivan, Audit & Assurance partner, Sustainability Services, Deloitte & Touche LLP

Endnotes

¹Tammy Whitehouse, “Double materiality: A new approach for measuring business value, performance,” WSJ Pro, March 14, 2025.

²Deloitte, 2024 Sustainability Action Report, 2024.

³Ibid.

⁴Ibid.

⁵Ibid.

The services described herein are illustrative in nature and are intended to demonstrate our experience and capabilities in these areas; however, due to independence restrictions that may apply to audit clients (including affiliates) of Deloitte & Touche LLP, we may be unable to provide certain services based on individual facts and circumstances.

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