While core financial reporting regulations remained relatively stable in the UK, sustainability reporting requirements emerged as the dominant force, driving substantial changes and setting the stage for further developments in 2025.
The Corporate Sustainability Reporting Directive (CSRD) has become a major focus for everyone in the reporting and ESG world in 2024, presenting significant challenges for companies as they navigate the complex landscape of the regulation’s requirements1. 2024 has been a year of preparation for the first wave of reporters, requiring significant resources from reporting and sustainability teams. In particular, data availability and the need for quality value chain analysis have proven especially challenging2, as well as finding the correct ways of reporting on conducting double materiality assessments (DMAs) and presenting these findings3.
The introduction of the CSRD has driven the widespread adoption of DMAs, which consider a company’s environmental and social practices’ impact on both its financial performance and the wider societal context. The DMA has become a benchmark for identifying material sustainability issues, influencing companies’ assessment and prioritization of their sustainability efforts.
The CSRD has accelerated the integration of sustainability information into annual reports. While there were initial concerns about the future of standalone sustainability reports, Black Sun's discussions with practitioners suggest that the sustainability report will remain relevant, albeit requiring more creative and focused communication of sustainability journeys moving forward4.
2024 has been a year of preparation for the first companies implementing the CSRD. With around 11,000 companies who will be publishing their CSRD-compliant reports soon5, the long-term impact of the CSRD is expected to be profound, potentially driving significant changes in corporate behaviour and influencing investment decisions towards more sustainable practices.
2024 witnessed a significant surge in sustainability reporting, driven by increasing stakeholder and investor demands for transparent data as well as stringent government regulations. This surge led to a proliferation of reporting frameworks, including mandatory frameworks like the Securities and Exchange Commission’s (SEC) climate-related disclosure rules, the aforementioned CSRD and the Corporate Sustainability Due Diligence Directive (CSDDD) as well as voluntary frameworks like sector specific guidance from the Taskforce on Nature-related Financial Disclosures (TNFD) and the Transition Plan Taskforce (TPT) as well as International Sustainability Standards Board’s (ISSB) climate disclosures (IFRS S1 and S2) that came into force in 20246.
Two key trends emerged in sustainability disclosures during 2024. Firstly, there was a growing emphasis on climate transition plans. For instance, ISSB announced initiatives aimed company transition plans disclosures7. Moreover, now CSRD mandates the disclosure of transition plans, and the European Financial Reporting Advisory Group (EFRAG) provided guidance on how climate transition plans should be addressed within the CSRD8. The CSDDD is poised to mandate transition planning for in-scope businesses between 2027 and 20299. A new framework for assessing the credibility of climate transition plans was also published by the Assessing Transition Plans initiative10.
Secondly, nature-related disclosures gained significant traction. Companies began adopting the TNFD framework, with early adopters announced at the World Economic Forum (WEF) in Davos 202411. Later in the year, TNFD also published draft guidance on nature transition planning12. Additionally, CSRD mandates the consideration of nature-related impacts. This trend is expected to further accelerate in 2025.
Looking ahead to 2025, we anticipate continued evolution in non-financial disclosures, including nature and transition plan-related ones, with the UK government considering making TPT regulation mandatory and developing UK Sustainability Reporting Standards (UKRS).
While sustainability dominated the reporting landscape in 2024, it's important to note that the UK Corporate Governance Code (2024) introduced significant changes, particularly regarding internal controls. Published in January 2024, the Code will become effective from January 1, 2025, with provision 29 on risk management and internal controls applying from January 1, 202613. The updated guidance on internal controls is prompting companies to provide more detailed explanations of their risk management processes, the board's approach to internal controls, and their conclusions in their annual reports. Companies with a March year-end should be particularly mindful of this change.
Several emerging trends and technologies are shaping the future of corporate reporting. One notable trend is the increasing focus on Artificial Intelligence (AI) regulation, with the EU AI Act and the UK government's guidance to regulators on AI oversight14. While AI regulation is evolving, its potential to revolutionize reporting practices is significant. By automating data collection, analysis, and reporting, AI can enhance the accuracy, efficiency, and insights derived from sustainability reporting. Beyond document management, technologies like data analytics and AI can play a crucial role in improving the overall quality of corporate reporting. It's worth noting that document management software, such as Workiva, is becoming increasingly popular in streamlining reporting processes.
2024 was a significant year for corporate reporting, with a strong focus on sustainability. The increasing regulatory landscape, driven by directives like the CSRD, has reshaped the reporting agenda. As 2025 approaches, we anticipate further regulatory developments, particularly in the UK with the potential adoption of TCFD and the development of the UK Sustainability Reporting Standards (UK SRS). The fact that the UK Sustainability Disclosure Technical Advisory Committee published their final endorsement recommendations of the ISSB’s IFRS S1 and S2 this week on 18th December further supports our predictions15.
At the same time, the EU is exploring the possibility of adopting the Omnibus simplification package which is supposed to reduce reporting requirements, with some media outlets suggesting that the EU is investigating merging the CSRD, CSDDD, and EU Taxonomy16.
Overall, as we move into 2025 we expect the trends to persist. Thus, to navigate this evolving landscape, companies should prioritize building robust data management systems and developing expertise in sustainability reporting. Active engagement with stakeholders is crucial to understand their information needs and ensure that reporting is relevant and meaningful. The shift towards greater transparency and accountability is undeniable, and companies that proactively embrace these changes will be well-positioned for long-term success.
If you need help to prepare for how these changes may impact your company, your reporting or how you engare with your stakeholders please get in touch, we are here to help!
Black Sun Global is a stakeholder advisory and engagement agency that's been driving transformation and positive change for ambitious brands for more than 20 years. With deep expertise in disclosure and reporting, ESG, sustainability, and digital engagement, we reshape how organisations connect with customers, investors, employees, and the wider world.
We are trusted partners to some of the most influential global organisations, sparking innovation and sustainable performance through our strategic insights, partnerships, and proprietary technologies.
As founders of the Positive Change Group, we are on a mission to create a new kind of stakeholder relations partner. Our world-class specialists work closely with executive leadership teams to protect reputations, inspire trust, and promote responsible business practices - building resilience and long-term value in a rapidly changing world.
For more information, please visit: www.blacksun-global.com
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