Sustainability Reporting is Alive and Well as a Best Practice

The Governance & Accountability Institute (G&AI) has released 2025 Sustainability Reporting In Focus, the fourteenth edition of its annual series tracking sustainability reporting. The report analyzes trends in sustainability reporting by companies in the S&P 500 and Russell 1000 indices.  In a press release announcing the 2025 report, G&AI says that its research “shows continued increases in sustainability reporting for both large-cap and mid-cap U.S. public companies -- as publishing an annual sustainability report is now widely recognized as a best practice for U.S. public companies.” The 2025 G&AI report covers sustainability reporting during the 2024 publication year.

G&AI published its first analysis of S&P 500 company sustainability reporting in 2012. Since then, sustainability reporting has become almost universal. G&AI’s initial report found that, in 2011, just 20 percent of S&P 500 companies published sustainability reports or disclosures. In 2019, G&AI expanded its research to include companies in the Russell 1000. For a discussion of last year’s G&AI report, see What Backlash? ESG Reporting Continues to Grow, September-October 2024 Update.

According to the press release, the key findings of the 2025 report include:

• A record 94 percent of Russell 1000 companies reported on sustainability in 2024, up from 93 percent in 2023.

• The smaller half by market cap of the Russell 1000 (mid-cap companies with $2 billion to $4 billion in market cap) had the greatest increase in reporting -- reaching 90 percent in 2024, compared to 87 percent in 2023.

• The larger half by market cap of the Russell 1000 (the S&P 500) are nearing 100 percent reporters with 99 percent reporting on sustainability in 2024, compared to 98.6 percent in 2023.

Most Russell 1000 companies use one or more ESG disclosure frameworks as the basis for their reporting. For the fourth consecutive year, the Sustainability Accounting Standards Board (SASB) disclosure standards were the most widely used framework, with 82 percent of Russell 1000 reporters aligning with SASB in 2024, compared to 81 percent in 2023 and only 12 percent in 2019.  Alignment with the disclosure recommendations of the Task Force on Climate-Related Financial Disclosure (TCFD) was the second most popular choice.  TCFD usage had the largest increase – from 60 percent in 2023 to 65 percent in 2024. Russell 1000 use of Global Reporting Initiative (GRI) disclosures remained constant at 55 percent in 2024.  In 2020, GRI was the most frequently employed framework (at 52 percent usage), but both SASB and TCFD have since surpassed GRI.

In two of the eleven industry sectors that G&AI tracks, all companies published a sustainability report.  These 100 percent reporting sectors were Materials and Utilities.  In five other sectors, at least 95 percent of companies issued such a report -- Real Estate (98 percent), Energy (97 percent), Industrials (96 percent), Consumer Staples (95 percent), and IT (95 percent).  As in 2022 and 2023, the sector with the lowest percentage of sustainability reporters was Communications, with 82 percent of companies issuing a sustainability report. Financials (89 percent) was the only other sector in which less than 90 percent of companies were sustainability reporters. 

External assurance on sustainability reporting continues to increase. In 2024, 51 percent of Russell 1000 companies that made sustainability disclosures obtained external assurance over at least part of their non-financial disclosures, up from 48 percent in 2023 and 40 percent in 2022. Sixty-eight percent of the companies in the largest half of the Russell 1000 index obtained assurance, compared to 66 percent in 2023 and 57 percent in 2022. Thirty-two percent of companies in the smallest half of the Russell 1000 obtained such assurance, an increase from 27 percent in 2023 and 21 percent in 2022.

The scope, level, and providers of sustainability assurance services vary widely. For all Russell 1000 companies that obtained external assurance, only four percent obtained assurance over their entire sustainability report, up from two percent in 2023. Fifty-four percent obtained assurance over only greenhouse gas (GHG) emissions data, down from 57 percent in 2023. Further, only five percent of assurance reports provided a reasonable/high level of assurance, compared to six percent in 2023. In contrast, 91 percent of assurance reports provided limited or moderate assurance.

Engineering firms continued to be the most frequent sources of assurance, probably because GHG emissions were the most frequent assurance topic. Engineering firms provided 63 percent of Russell 1000 assurance reports, down from 66 percent in 2023 and 68 percent in 2022. Accountants provided the assurance report in 19 percent of Russell 1000 assurance engagements (compared to 21 percent last year), and “Small consultancy/Boutique firms” were the providers of 11 percent of assurance reports.  In seven percent of the reporting, the assurance provider was not specified. 

Audit Committee Takeaways

During the past year, the sustainability reporting landscape has changed considerably in the United States.  While the prior Administration enthusiastically supported sustainability disclosure, particularly as it related to climate change, the current Administration has the opposite philosophy.  The SEC’s climate disclosure requirements are, as a practical matter, dead (see SEC Takes Another Step Away From Climate Disclosure, March-April 2025 Update), and it is unlikely that the Commission will venture into other areas of sustainability disclosure.  In contrast, California has enacted far-reaching climate disclosure requirements (see California Climate Disclosure Laws Survive a Challenge, September 2025 Update), and other states are considering following suit.

Despite the uncertainty inherent in this environment, voluntary sustainability disclosure is still increasing.  As G&AI observes:

“In this context it is worth remembering that, in the 14 years of G&A’s annual research, there has been a consistent year-over-year increase in sustainability reporting by the largest companies in the U.S., despite there being no regulatory force requiring it. * * * Whether driven by investors, customers, or employees, by market pressures or concern for a social license to operate, managing non-financial issues adds business value by mitigating risk and capitalizing on opportunities for innovation, efficiency, and engagement.  * * * The latest practices and financial strength of the Russell 1000 prove G&A’s long-standing hypothesis – that transparent and accountable communication on corporate sustainability issues is essential to strong and resilient business”.

Oversight of sustainability disclosure will likely be an important aspect of the work of most audit committees for the foreseeable future.  Audit committees that are not already doing so should focus on what sustainability disclosures their company makes, how the company collects sustainability information, how the disclosures impact financial reporting, and on the controls and procedures to which sustainability disclosures are subject. For additional discussion of the implications of sustainability disclosure for audit committees, see Sustainability Disclosure and Assurance Have Caught on Big-Time, June-July 2025 Update.