The Big Four accounting firms – Deloitte, EY, KPMG and PwC – along with the World Economic Forum’s International Business Council unveiled a joint reporting framework for environmental, social and governance (ESG) standards in September 2020.

In this issue, we provide our views on the potential impact of this new standard on the existing sustainability reporting landscape, which is already crowded with multiple frameworks with stakeholders still searching for the elusive ‘one size fits all’ standard.

We believe

• Standardisation has been a long time coming. The Big Four standard could be a good consensus candidate given its minimalistic approach and significant overlap with the Global Reporting Initiative and Sustainability Accounting Standards Board standards
• The role of the Big Four could accelerate harmonisation and improve ESG data quality
• Global regulators need to quickly move towards an accepted common framework
• Even if the standard is enforced globally, challenges will persist around the desired breadth of ESG disclosures required for assessing material risks related to specific sectors, climate risk and value chain impact
• Asset managers will benefit from standardisation but will need to plug gaps in disclosure of material ESG metrics using proxies and secondary data sources