ESG disclosure and materiality explained
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 financial accounting practices and evolutionary biology may recall Ernst Haeckel’s law that ‘ontology recapitulates phylogeny’. It refers to the astonishing fact that the stages an animal embryo undergoes during development are a chronological replay of that species’ past evolutionary forms. Despite major efforts by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB), significant differences remain between accounting practices in the United States and the rest of the world. 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. Why are we surprised?

Luckily for me, Hanks tracks all this stuff with a passion. I periodically get 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 falls well short of its 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 contribution 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 by now (though sadly are not, though I’ll be mature and hold back from naming here).

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 practitioners rarely make the requisite decisions.


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

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