Sustainability vs ESG: A troublesome split in disclosure?
27 November 2021

“It’s a bit of a zoo…”. WBCSD President Peter Bakker’s apt summation of the ESG/sustainability disclosure arena last year. With the official launch of the ISSB this month, there’s been some trumpeting about how nicely things are coming together. There’s convergence and there’s no doubt the Value Reporting Foundation is facilitating some useful discussion. We also see evidence of a troublesome split…

Those familiar with evolutionary biology may recall Haeckel’s law that ‘ontology recapitulates phylogeny’. It refers to the astonishing fact that an animal embryo goes through stages during development that are a chronological replay of that species’ past evolutionary forms.

Is something similar at play in the evolution of ESG disclosure? Despite major efforts by the respective world bodies, significant differences remain between the financial accounting practices in the United States and the rest of the world. With international moves to standardise sustainability disclosure, true to form, thirty years of dogged effort by the Global Reporting Initiative and the EU’s non-financial reporting experts appear to be sidelined by the ISSB. It’s irritating, but we should not be surprised.

Luckily for me, Hanks tracks all this stuff with a passion. I occasionally receive an expletive-filled WhatsApp from some conference or webinar he’s moderating, but generally he stays enviably calm in the face of it all. We both think integrated reporting and sustainability disclosure fall well short of their potential, despite close to a decade of practice. When he’s not threatening to throw it all in and go fishing, I suspect this reality keeps him working and reworking the way we present it.

Here’s his latest sketch on materiality and ESG disclosure, drawing on materials developed by the GRI, CDP, CDSB, VRF and IFRS. I’ll leave you to navigate the acronym soup. The framework is prefaced by a few broad statements, all of which should be obvious.

An organisation impacts its stakeholders and the natural environment. In turn, stakeholders and the environment affect the business and its performance. These impacts may be positive or negative and will vary in time.

Organisations report these interactions differently depending on the target audience. Three broad arenas of reporting have emerged, addressed by various international disclosure standards and initiatives.


In our minds, teams of intrepid integrated reporters go forth and help to save humanity… The reality will be far more tedious as disclosure practitioners are generally miles away from where decisions get made.

(NOTE: I am hoping to be proven wrong here… The ISSB and GRI announced a collaboration agreement on 24 March 2022 and we might be seeing the start of something encouraging.)


Banner pic is a plate from Ernst Haeckel’s Evolution of Man (1879) comparing vertebrate embryos. Source:

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