New European regulations and surging global IFRS adoption are forcing companies to fundamentally rethink their disclosure strategies.
The sustainability reporting landscape will be at a pivotal moment in 2025. Companies are navigating a complex mix of new regulatory mandates and shifting investor expectations. An analysis based on an ISS-Corporate memorandum by Kosmas Papadopoulos, and highlighted on the Harvard platform, confirms this trend. Understanding these framework adoption patterns is now critical for compliance and credibility.
Regulatory pressure reshaping Europe:
Europe is being fundamentally reshaped by the European Sustainability Reporting Standards (ESRS). The first year of implementation is underway, setting detailed mandatory requirements. This has prompted a noticeable shift away from purely voluntary frameworks.
In the EMEA region, GRI adoption dropped sharply, from 55% in 2024 to 37% in 2025. This is because the ESRS’s scope is so comprehensive that it makes GRI seem redundant for many companies. SASB adoption also declined.
However, TCFD reporting remained steady at 56%. This is because ESRS E1 fully incorporates TCFD’s 11 recommended disclosures. This ensures strong interoperability, allowing companies to build on existing climate practices.
Global swing toward IFRS:
The IFRS S1 and S2 standards are gaining definitive global traction. More than 30 jurisdictions are moving toward mandatory reporting using these standards. IFRS S2 effectively replaces TCFD for climate disclosures. IFRS S1 incorporates industry-specific SASB principles.
In the Asia Pacific, TCFD is dominant, with adoption holding at 63%. This reflects its foundational role in emerging regulatory requirements across Japan, Australia, and Hong Kong. Many jurisdictions are converging around IFRS S2 as the common reference point. GRI remains persistent at 53%, used to meet broader stakeholder demands alongside climate mandates.
The US and the voluntary path:
The United States lacks a federal climate mandate after the SEC rule was withdrawn. However, California’s mandatory climate reporting starts in January 2026. This is expected to drive broader TCFD and IFRS S2 uptake across the country.
In the Americas, voluntary frameworks are gaining ground. TCFD adoption rose steadily, moving from 27% in 2022 to 35% in 2025. SASB also maintained momentum, increasing from 37% to 41%. This flexibility has driven uptake among large and mid-cap companies.
Strategic choices:
Accelerated adoption of IFRS standards is expected globally in 2026–2027. This will reinforce the global shift toward standardized sustainability disclosures.
Despite this regulatory rise, multi-framework reporting remains relevant. GRI continues to play a complementary role, particularly in voluntary settings. IFRS S1 and S2 emphasize financial materiality. GRI’s focus on stakeholder inclusiveness and double materiality provides necessary broader coverage. Companies must strategically balance compliance requirements with diverse stakeholder expectations. Greater clarity on a simplified ESRS version is also expected soon, aiming to streamline European reporting.
