There are more than 200 frameworks, standards, and guidance on sustainability reporting and climate-related disclosures across 40 countries. This multitude of frameworks undermines the consistency and comparability of sustainability reporting. Hence, global taxonomies such as the European Union taxonomy aim to address this challenge. However, taxonomies focusing on sustainable investments can fail to recognize efforts taken by enterprises to transition to a climate-sustainable business model, thereby hindering the flow of capital to them.
The way forward is to standardize decision-useful information to help meet the significant financing and investment needs of climate change mitigation and adaptation. Consequently, the list of currently missing data items produced by the Network for Greening the Financial System and the Climate Change Indicators Dashboard created by the International Monetary Fund (IMF) are essential steps.
Furthermore, the International Financial Reporting Standards Foundation's initiative to develop global sustainability reporting standards will help to promote transparency and global comparability. Aligning financial and non-financial reporting and providing assurance by auditors would also facilitate decision-making and improve market confidence.
A consistent, timely, and uniform implementation of internationally agreed sustainability reporting standards is necessary to make progress. In the future, the scope of the standards have to be widened to encompass broader sustainability dimensions, such as the loss of biodiversity and social and governance issues.
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