Maintaining standards: why climate reporting matters amid policy turbulence

Major economies have wavered on key climate commitments, while rising trade tensions have diverted attention and resources from mitigation efforts. Yet, as the physical impacts of climate change become more visible and urgent, the need for transparent, consistent reporting on greenhouse gas (GHG) emissions and broader climate risks has never been more critical. Amid the noise, markets, customers, investors and wider stakeholders need clear information on the risks and opportunities facing companies to make the best decisions possible.  

In a recent update, therefore, Wood Mackenzie analysts examined the changing dynamics of the main global emissions reporting frameworks, particularly the International Sustainability Standards Board (ISSB) standards, and explored the risks and opportunities that lie ahead. 

To receive a complimentary extract from our update, fill in the form at the top of the page, and read on for a brief introduction. 

Sustainability reporting is being standardised 

The current sustainability reporting landscape is dominated by three main frameworks: the ISSB standards, the EU’s Corporate Sustainability Reporting Directive (CSRD) and the US’s Securities and Exchange Commission (SEC) final rules.  

Scope 3 emissions continue to form a key part of conversations for regulators, standard-setters, investors and broader stakeholders. Measuring and reporting supply-chain emissions is a complex and data-intensive task, which requires collaborative effort along the entire value chain. Early movers will gain competitive advantage as regulations change. 

Indeed, regulatory pressure continues to intensify as authorities recognise the need for transparent emissions data. What’s more, investor demand is higher than ever, with climate-related data increasingly used in investment decisions. 

The trend towards standardisation is picking up, therefore. Frameworks are moving towards interoperability and convergence, largely with the ISSB principles. Technology is helping with data and verification requirements, making compliance more feasible. 

Meet the ISSB 

Formed in 2021, the ISSB quickly consolidated a raft of reporting initiatives and positioned itself as a global baseline of sustainability disclosure. It issued its first standards, International Financial Reporting Standards (IFRS) S1 and S2, in mid-2023 and has rapidly gained recognition by central banks, major stock exchanges and securities commissions. 

As of early August 2025, around 20 jurisdictions had adopted or finalised rules based on the ISSB standards, with a further 15 countries working to adopt them. Combined with the EU and US frameworks, the total number of jurisdictions implementing mandatory emissions reporting will soon cover a significant proportion of global corporate emissions. 

The ISSB is working on interoperability with other frameworks. In recently subsuming the Taskforce for Climate-related Financial Disclosures (TCFD), it has positioned itself as the preeminent voluntary standard for corporate reporting on climate-related risks and opportunities. 

In 2024, it undertook a consultation on future priorities. Market participants were asked what was important to them and where they see the need for standardisation of reporting. Based on this, it is researching the disclosure of risks and opportunities in biodiversity, ecosystems and ecosystem services, as well as human capital. More details are due in early 2026. 

The ISSB has a concurrent consultation underway on enhancements to the Sustainability Accounting Standards Board standards ‒ sector-specific disclosure guidelines for non-climate-related sustainability disclosures. 

The risks of non-alignment 

Companies run a significant risk of fines, legal liabilities and market access restrictions by not complying with mandatory reporting frameworks. Under the EU CSRD, fines vary, but can be substantial, comparable with financial reporting penalties.  

Access to capital can be significantly impacted, too, with investors, finance providers and exchanges increasingly demanding climate disclosures. A lack of preparation for the transition to a low-carbon economy can result in a higher cost of capital due to perceived higher risk. 

Moreover, stakeholders can see non-compliance as a sign of concealment or greenwashing. Brand value can be damaged, with a knock-on effect on market capitalisation. Benchmarking against compliant peers can have negative effects. 

There are also strategic and competitiveness risks. A lack of voluntary engagement or compliance can undermine long-term strategy in markets where investors, regulators and customers demand transparency. Peers that disclose climate-related information may gain a competitive edge. 

To learn more, fill in the form at the top of the page for a complimentary extract from our update.