A European Union body and a global standard setter said on Tuesday they have reached a "milestone" on helping international companies avoid costly duplication in climate-related disclosures.
Several sets of mandatory disclosure norms are being finalised to replace a patchwork of voluntary private sector best practices.
Regulators see this as critical to stamping out greenwashing, or companies downplaying the impact of climate change, but also want "inter-operability" to avoid unnecessary costs for companies that will apply more than one set of disclosure rules.
The EU is finalising its European Sustainability Reporting Standards (ESRS) drafted by its advisory body EFRAG. They will require about 50,000 companies to disclose how climate change affects their operations, and how the companies themselves add to climate change, known as double materiality.
Disclosure norms from global standards body GRI on how companies impact the environment have long been used by firms, raising concerns they will have to duplicate reporting when EU rules apply.
"Existing GRI reporters will be well prepared to report under the ESRS," EFRAG and GRI said in a joint statement on Tuesday.
"Entities reporting under ESRS are considered as reporting with reference to the GRI Standards and will therefore avoid the burden of multiple reporting."
GRI has teamed up with the new International Sustainability Standards Board (ISSB), which has just finalised its first set of rules for companies to disclose how climate change impacts their bottom line.
The combination of ISSB and GRI seeks to replicate the "double materiality" of EU norms.
The ISSB has also been making its own disclosures "inter-operable" with ESRS.
ISSB Chair Emmanuel Faber told the European Parliament on Monday that the board has reached a "very high level" of alignment with the ESRS on climate standards.
"There is a shared ambition from this strong start that we will build further inter-operability over time with the European standards," Faber said.
Companies are still waiting to see the final shape of climate disclosures from the United States and how well they will align with the ISSB and EU norms.
