For many years, sustainability reporting was largely viewed as a voluntary corporate exercise.
Organisations that chose to disclose information on their environmental, social, and governance (ESG) activities often did so to enhance their reputation, strengthen stakeholder relationships, and demonstrate corporate responsibility.
Today, however, the landscape has changed dramatically.
Sustainability reporting has evolved from being a discretionary practice to becoming an implicit requirement for organisations seeking legitimacy, investment, market access and regulatory compliance.
Although major global standard-setting bodies such as the IFRS Foundation have not explicitly declared sustainability reporting to be universally mandatory, developments across jurisdictions indicate that businesses can no longer afford to ignore it.
The reality is that sustainability reporting has moved beyond voluntary adoption and has become a practical necessity in modern corporate reporting.
The growing importance of sustainability reporting is driven by increasing stakeholder demands for transparency and accountability.
Investors, regulators, consumers, employees, financiers and civil society organisations are demanding greater disclosure on how companies manage environmental risks, social impacts and governance practices.
Climate change, biodiversity loss, human rights concerns, supply chain disruptions and social inequalities have heightened public awareness of the broader impacts of business activities.
Research consistently demonstrates that stakeholders increasingly consider ESG information alongside traditional financial information when making decisions.
According to Eccles and Klimenko (2019), Kurznack et al. (2021), and Tenorio-Salgueiro et al. (2025), sustainability considerations have become central to investment decisions as investors seek to understand long-term value creation and organisational resilience.
Similarly, Adu et al. (2026), Adjayi (2024), Friede, Busch, and Bassen (2015), and Mensah (2025) found substantial evidence that strong ESG performance is positively associated with corporate financial performance.
Global standards for sustainability reporting
Historically, sustainability reporting was characterised by multiple voluntary frameworks.
Organisations could choose among reporting standards such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), the Integrated Reporting Framework, and the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
While these frameworks contributed significantly to advancing sustainability disclosure, the voluntary nature of reporting resulted in inconsistencies, comparability challenges, and concerns about selective disclosure and greenwashing.
Recognising these challenges, the global reporting environment has undergone significant transformation. A major milestone occurred in 2021 when the IFRS Foundation established the International Sustainability Standards Board (ISSB) to develop a comprehensive global baseline for sustainability-related disclosures.
Subsequently, the ISSB issued IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures), creating a globally recognised framework for sustainability reporting.
Importantly, the IFRS Foundation has not mandated sustainability reporting for all organisations worldwide. Instead, it provides standards that jurisdictions may adopt or incorporate into their regulatory frameworks.
Nevertheless, the influence of these standards is substantial.
As countries increasingly adopt ISSB-based requirements, sustainability reporting is becoming embedded within national reporting obligations.
Nowhere is this shift more evident than in the European Union.
Through the Corporate Sustainability Reporting Directive (CSRD), the EU has significantly expanded sustainability disclosure requirements for thousands of companies operating within or conducting substantial business in Europe.
Organisations are now expected to disclose detailed information regarding environmental impacts, social issues, governance structures, climate risks, and sustainability strategies.
The directive represents one of the most ambitious sustainability reporting initiatives globally and signals a clear transition from voluntary disclosure to regulatory expectation.
Beyond Europe, countries such as the United Kingdom, Canada, Australia, Singapore, Japan, South Africa, and several emerging economies are introducing or strengthening sustainability disclosure requirements. Stock exchanges across the world increasingly require listed companies to provide ESG-related information as part of their annual reporting obligations.
The global momentum: the “implied mandatory” reporting
This global momentum creates what may be described as an "implied mandatory" status for sustainability reporting.
Even where legislation does not explicitly compel every company to produce sustainability reports, market realities effectively do.
Institutional investors are among the strongest drivers of this transformation.
Asset managers, pension funds, and development finance institutions are increasingly integrating ESG factors into investment decisions.
Organisations unable to provide credible sustainability information may face higher capital costs, reduced investor confidence, and diminished competitiveness.
Sustainability reporting has, therefore, become an essential component of corporate communication and risk management.
Implications of sustainability reporting
The implications are particularly significant for businesses in developing economies, including those in Africa.
As global investors and multinational corporations apply more rigorous sustainability standards throughout their value chains, African companies must strengthen their sustainability reporting practices to remain competitive.
Organisations that proactively embrace sustainability reporting will be better positioned to attract investment, access export markets, and build stakeholder trust.
Furthermore, sustainability reporting offers benefits beyond compliance.
It enables organisations to identify risks and opportunities, improve strategic decision-making, enhance operational efficiency, and strengthen corporate governance.
Companies that systematically measure and disclose sustainability performance are often better equipped to manage long-term challenges and create sustainable value.
Critics may argue that sustainability reporting imposes additional costs and administrative burdens, particularly on smaller organisations.
While these concerns are valid, the long-term benefits of transparency, accountability and stakeholder confidence often outweigh the associated costs.
Moreover, technological advancements and the emergence of standardised reporting frameworks are helping to reduce reporting complexities.
In today's business environment, sustainability reporting is no longer a matter of choice; it is increasingly a prerequisite for credibility, competitiveness and long-term success.
The writers are
➢ a member of the Chartered Institute of Tax Law and Forensic Accountants – Ghana (CITLFAG) and an Employee of the Ghana TVET Service.
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➢ and a chartered petroleum economist, a tax and management consultant and CEO of Centre for Professional Studies, Ho.
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