ESG Beyond Compliance: Global Standards for 2026.
The Standards Landscape
The ESG reporting landscape has consolidated significantly. The International Sustainability Standards Board (ISSB) has emerged as the global baseline, with IFRS S1 (General Sustainability) and IFRS S2 (Climate) now effective. The EU's Corporate Sustainability Reporting Directive (CSRD) came into force with phased implementation from 2024, applying to approximately 50,000 companies. The SEC's climate disclosure rules, while challenged in court, have influenced voluntary disclosures. In APAC, Australia's ASRS and Japan's SSBJ standards are now operational.
From Voluntary to Mandatory Assurance
The shift from voluntary ESG reporting to mandatory assurance is one of the most significant developments. Under CSRD, limited assurance on sustainability reporting is required from FY2026, moving to reasonable assurance by FY2029. ISSB standards do not mandate assurance but several adopting jurisdictions are building assurance requirements into their frameworks. This has profound implications for internal controls, data systems, and the skills required within finance and sustainability teams.
Supply Chain Due Diligence
The EU's Corporate Sustainability Due Diligence Directive (CSDDD) requires companies to identify, prevent, and mitigate adverse human rights and environmental impacts across their value chains. This extends beyond direct suppliers to the entire chain of activities. Companies must adopt a risk-based approach to due diligence, engage with stakeholders, and develop transition plans aligned with the Paris Agreement. Non-compliance can result in fines of up to 5% of worldwide turnover.
Preparing for Assurance Readiness
Organizations should begin preparing for mandatory assurance now. Key steps include: establishing a robust internal control environment for ESG data; implementing systems that can track and report ESG metrics with audit-trail quality; conducting a gap analysis against applicable standards; and engaging with assurance providers early to understand expectations. DeccanBridge's ESG Assurance practice has developed a proprietary readiness assessment tool that evaluates control maturity across 12 dimensions.