April was an eventful month for sustainability policy across Asia and Europe.
In Asia, South Korea, Bangladesh, and Nepal each launched consultations on adopting ISSB-aligned standards.
In Europe, rumors began to swirl that the European Commission was exploring ways to make ESRS-aligned sustainability reports fully compatible with the ISSB standards. Separately, Switzerland launched a consultation on its own sustainability reporting framework, and EFRAG formally kicked off work on the Non-EU European Sustainability Reporting Standards (N-ESRS).
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Asia: South Korea becomes the latest to propose mandatory ISSB reporting
At the end of March, South Korea's Financial Services Commission (FSC) closed a consultation on mandating International Sustainability Standards Board (ISSB)-aligned disclosures for large listed companies一the sustainability and climate-related financial standards, developed by the IFRS Foundation.
This continues the trend of countries basing their climate disclosure regulation on ISSB. Six countries, including China, Australia, and Canada, have existing mandatory ISSB-aligned disclosure requirements. A further five are expected to have similar mandatory requirements by 2028, including the UK and Singapore. In total, ISSB S1 and S2 standards have been—or are in the process of being—adopted by 39 jurisdictions (with Bangladesh and Nepal opening consultations on ISSB-aligned disclosure requirements in April).
For South Korea, around 200 companies are expected to be in scope for initial mandatory disclosures, with the scope gradually expanding as the sustainability reporting ecosystem matures.
The details on South Korea’s proposed regulations:
- Who is in scope?
- Phase 1: Korea Exchange-listed companies with total assets exceeding KRW 30 trillion (approximately $20 billion)—around 58 companies—must begin reporting in 2028 on FY2027 data.
- Phase 2: Korea Exchange-listed companies with total assets exceeding KRW 10 trillion (approximately $7 billion)—around 100 to 150 companies—must begin reporting in 2029 on FY2028 data.
- What to report:
- ISSB-aligned disclosures, with some ramp-ups. IFRS S2 will be mandatory; IFRS S1 is optional.
- Scope 3 emissions become mandatory three years after the first mandatory report.
- Assurance: Voluntary for now, with the possibility of mandatory assurance addressed in a future consultation.
- Next steps: The FSC is expected to finalize the proposal within the next month.
- What to do now: Once the FSC proposal is approved, companies will have an official signal to begin planning their sustainability reporting.
Europe: EU weighing last-minute equivalence of ISSB and ESRS?
One exception to the expanding wave of ISSB-aligned disclosure is Europe. The European Commission has historically taken a more expansive view of which sustainability risks and opportunities merit disclosure, leading to the significantly more detailed CSRD standards.
However, this month, Responsible Investor reported that the Commission was considering revamping the draft Simplified European Sustainability Reporting Standards (ESRS) to allow for ISSB compatibility. While maximum interoperability has been a long-term shared goal of the standards, the timing of the reported discussions is surprising, as the final ESRS are expected by mid-June.
Why it matters: The ESRS and the ISSB take substantially different approaches to determining what to disclose. ISSB requires assessing whether a sustainability risk or opportunity is financially material, while the ESRS requires assessing materiality from both a financial and stakeholder impact perspective (double materiality). Depending on what is confirmed, the consequences for companies planning CSRD reporting could range from significant (reconsider how to assess material topics, reword report language) to minor (use an ESRS-aligned report with some data points removed for ISSB compliance).
What to do now: Companies should be clear that reports of the Commission’s deliberations have not been publicly confirmed. Current and upcoming CSRD reporters should continue planning for their double materiality assessment and CSRD data collection. Watershed is tracking developments closely and will provide guidance on how companies should react if any news emerges.
Europe: Switzerland launches sustainability reporting consultation
While the UK, Australia, and Asia converge on ISSB, Switzerland has elected to follow the EU and base its regulations on CSRD. In early April, the Federal Council (Switzerland's executive branch) launched a consultation on mandating sustainability reporting for large companies based on the EU’s CSRD framework.
Why it matters: Approximately 110 companies incorporated in Switzerland are expected to be in scope for mandatory reporting. Following the lead of the Commission, the proposal mandates using the ESRS as the default reporting standard, meaning Swiss reports can satisfy CSRD requirements and vice versa. Most large Swiss companies have an extensive presence in Europe and are likely in scope for CSRD. The additional burden on these companies is expected to be minimal.
The details:
- Who is in scope: Companies with 1,000+ employees AND CHF 450 million+ (approximately €488 million) in revenue.
- Timeline: The earliest possible reports would be due in 2028, covering FY2027 data.
- Next steps: The Federal Council must submit a final proposal to the Swiss Parliament by November 27.
- What to do now: Assess whether you are in scope based on the thresholds above. Review the draft Simplified ESRS for an initial sense of what your reporting obligations may look like.
Europe: N-ESRS workplan announced
Finally, on April 21, EFRAG formally began discussions on developing the Non-EU European Sustainability Reporting Standards (N-ESRS). As a reminder, EU companies in scope for CSRD must use the Simplified ESRS in their CSRD reports. Non-EU parent companies in-scope for CSRD, by contrast, have the option to use a less intensive reporting framework (N-ESRS) for their CSRD reports.
Why it matters: Drafting of the N-ESRS had been paused during the CSRD Omnibus process. Clarity on the future development of these standards gives clarity to non-EU parent companies wondering how they were to comply with CSRD reporting obligations.
What to do now: No action is required at this stage. The earliest a public draft of the N-ESRS is expected at the end of 2026. EFRAG has confirmed that substantive work will not begin until the Simplified ESRS are finalized. The first non-EU parent company CSRD reports are due in 2029 on FY28 data.
