The Carbon Trust
Explained byThe Carbon Trust

Identify the right reporting mechanisms

The right reporting mechanisms for your company will depend on your investor needs and local regulatory requirements

To identify the right reporting mechanisms for your company, begin by getting clarity on your regulatory and investor reporting requirements and the needs of other stakeholder groups who will use your reporting.

Comply with regulatory and investor reporting requirements, and go further

  • You should first identify relevant regulations your company is obliged to comply with. These regulations define what information you are required to report, including whether you need to report in line with global or regional frameworks, such as TCFD, ISSB, or the EU’s Corporate Sustainability Reporting Directive (CSRD). For more on reporting to ISSB or CSRD, go to Step 3. If your company is large and publicly listed, it is likely you already have regulatory requirements to disclose information on climate-related matters. However, regulations are increasingly extending to SMEs too. For instance, the CSRD will be mandatory for SMEs from 2026

  • In addition to regulatory requirements, your investors may have certain requirements or expectations for you to provide more transparency on your climate-related financial risks and opportunities. This may mean your company needs to report in line with TCFD or ISSB on climate-related financial risks and opportunities. Investors or regulators may also require you to publish a Net Zero transition plan in line with emerging best practice. For more on disclosing a Net Zero transition plan, go to Step 3

  • Beyond regulatory and investor requirements, other stakeholders may want or expect different information. You may therefore choose to report through additional voluntary standards, such as the Global Reporting Initiative (GRI) standards, or through the online disclosure platform, CDP. For more on reporting to GRI or CDP, go to Step 3

  • Sustainability reporting standards increasingly require disclosure of a comprehensive Net Zero transition plan on a ‘comply or explain’ basis. You can strengthen your company’s climate reporting by publishing a plan that outlines what your business will do over the near and long term to decarbonize in line with Net Zero. For more on publishing a Net Zero transition plan, go to Step 3

Figure 2: Key steps to help identify the relevant reporting mechanisms for your company.

Perform a gap analysis

At the outset of your reporting cycle, you should review the approach you took in the previous cycle and assess it against current (or incoming) regulatory and investor reporting requirements. The global climate reporting landscape is fast-moving, so it is important for your company to regularly assess your climate disclosure requirements.

Non-compliance with reporting regulations holds significant potential risk for your company, mostly in the form of penalty fees. In the EU, for example, individual member states have the flexibility to impose penalty fees for non-compliance with the Corporate Sustainability Reporting Directive, which could result in your business being charged large sums.