2 Institutional Background
This chapter first briefly discusses the history of sustainability reporting (chapter Section 2.1), then gives an overview of the legal and organizational background of the European Sustainability Reporting Standards (ESRS) (chapter Section 2.2) and finally surveys closely related, other sustainability reporting standards and standard-setters such as the IFRS Sustainability Disclosure Standards and the standards of the Global Reporting Initiative (GRI) (chapter Section 2.3).
2.1 History of Sustainability Reporting
The topic of ESG reporting had been gaining momentum for several decades, although widespread mandatory reporting is only now evolving (this chapter leans on chapter 4 of Sellhorn and Wagner 2023).
Pressure from socially responsible investors increasingly pushes companies to not only pay lip service to their environmental responsibility, but to also implement these considerations into mainstream business strategy.
This followed several environmental catastrophes, e.g., the Exxon Valdez oil spill or the Chernobyl nuclear disaster. In 2006, the United Nations Principles for Responsible Investing (UN PIR) were launched and backed by institutional investors holding over 6.5 trillion USD in assets. By 2021, this framework spans institutions representing over 121 trillion USD, showcasing the enormous growth in this field. Today, mainstream investors such as BlackRock (including via the famous “CEO Letters” of its CEO Larry Fink) fuel capital flowing into sustainable venues.
One of the earlier responsible investors is Ceres, which was launched in 1989. Ceres was also involved in the setup of the first G1 Guidelines of the Global Reporting Initiative (GRI). This “dominant reference” – albeit completely voluntary – has been existing since 2000 and continues to enjoy broad acceptance in more than 60 jurisdictions that reference them, and a majority of large global companies that use them.
2.2 Background on ESRS
2.2.1 The European Financial Reporting Advisory Group (EFRAG)
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What are the philosophical foundations of sustainability reporting and how are these followed in the work of EFRAG? (a) positivism (b) interpretivism (c) critical realism
2.2.2 Corporate Sustainability Reporting Directive (CSRD)
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2.3 Related sustainability reporting standards
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