Progress in the harmonisation of ESG reporting in South Africa, the USA and the UK: A comparative analysis

Abstract

Over the past few years, there has been a proliferation in the number of environmental, social and governance (ESG) reporting standards and frameworks. Unlike financial reporting, ESG reporting does not have a generally accepted reporting standard, mainly because ESG reports invoke the interests of a far wider range of stakeholders, thereby making it impossible to develop a universally accepted standard that sufficiently caters to the information needs of all stakeholders. Rather, a multi-standard approach seems most appropriate for ESG reporting. The conjunctive application of different ESG reporting standards and frameworks ensures that all stakeholders are addressed and also improves disclosure quality and quantity. In recent years, several collaboration efforts between standard- and framework-setters, such as the CDSB, GRI, IIRC, ISSB and SASB, have occurred. These collaborations aim to understand how the various reporting standards and frameworks align, how they can be harmonised and how reporters can apply them complimentarily. For the purposes of this study, harmonisation refers to the simultaneous application of various ESG reporting standards and frameworks. This study compares progress made in South Africa, the USA and the UK over the 2019 to 2021 period in relation to the concurrent application of ESG reporting standards and frameworks, and also considers the underlying patronage that facilitated such progress. This was primarily executed by means of a content analysis of the ESG reports of the top 40 listed companies in each country, and also by the collection and summarisation of each country's legal, regulatory, corporate governance and stock exchange patronage for ESG reporting and harmonisation. In spite of strong evidence of harmonisation in each of the sample countries, the study finds that South Africa's harmonisation progress appears to be slightly delayed in relation to the USA and the UK, albeit still commendable. The study also finds evidence that a positive correlation may exist between ESG scores and the number of reporting standards and frameworks applied.