KPMG Global Survey of Sustainability Reporting 2025: The Move to Mandatory ESG Disclosure

Sustainability Reporting Reaches Universal Adoption Among Global Giants

The era of optional sustainability reporting is rapidly drawing to a close. KPMG’s landmark 2024 Survey of Sustainability Reporting, encompassing the world’s 250 largest companies (G250) and the top 100 companies in 58 countries and jurisdictions (N100), paints a clear picture: sustainability reporting has become a non-negotiable element of corporate communication. With 96% of G250 companies now disclosing their environmental, social, and governance performance, the practice has transcended its origins as a voluntary transparency exercise to become a fundamental business function.

The numbers are even more striking when examined at the country level. In Japan, Malaysia, Singapore, South Korea, South Africa, Thailand, and the United States, all top 100 companies report on sustainability without exception. This universal adoption reflects a convergence of regulatory pressure, investor demands, and stakeholder expectations that has left virtually no major corporation untouched. The question is no longer whether companies report, but how comprehensively and credibly they do so.

For organizations navigating the increasingly complex sustainability landscape, understanding the global trajectory of reporting practices is essential. This analysis breaks down the critical findings from KPMG’s survey, providing actionable insights for corporate leaders adapting their disclosure strategies in an era of mandatory reporting.

CSRD and the Shift to Mandatory Sustainability Disclosure

The European Union’s Corporate Sustainability Reporting Directive (CSRD) represents the most ambitious mandatory sustainability reporting framework ever enacted. Beginning with reports on financial years ending from December 31, 2024, the CSRD will eventually require thousands of companies operating in or connected to the EU to disclose sustainability information using the European Sustainability Reporting Standards (ESRS). The directive’s phased rollout extends through 2029, depending on company size and headquarters location.

What makes KPMG’s findings particularly notable is the extent to which companies are getting ahead of the mandate. Many organizations, particularly those headquartered in Europe or with significant European operations, have already begun aligning their reporting with CSRD requirements. Nearly half of European companies in the research already make disclosures using the EU Taxonomy, the classification system that defines environmentally sustainable economic activities.

This proactive compliance suggests that corporate leaders recognize the strategic advantages of early adoption. By implementing CSRD-aligned processes before the deadline, companies can identify data gaps, refine internal systems, and position themselves favorably with investors and regulators. The directive’s requirement for third-party assurance of sustainability information adds another layer of urgency, as building robust data collection and verification processes takes time.

The CSRD also introduces the concept of double materiality as a mandatory requirement, fundamentally changing how companies assess and report their sustainability impacts. This shift from single materiality — which focused primarily on financial relevance — to a dual lens that also considers societal and environmental impact, has ripple effects across the entire reporting ecosystem.

Double Materiality Gains Ground as the New Standard

One of the most significant shifts documented in KPMG’s survey is the rapid adoption of double materiality assessments. Nearly four-fifths of both the G250 and N100 groups now use some form of materiality assessment, but the larger G250 companies are notably more likely to employ the double materiality approach. This method assesses both how a company impacts society and the environment (impact materiality) and how sustainability issues affect the company’s financial performance (financial materiality).

The growth of double materiality adoption is closely linked to CSRD preparation. As the most complete form of materiality assessment and a cornerstone of CSRD compliance, companies adopting double materiality are effectively future-proofing their reporting processes. The survey reveals that approximately half of the world’s largest companies now employ this approach, a significant increase from previous years when single materiality dominated corporate disclosure.

Implementing double materiality requires companies to engage with a broader set of stakeholders and consider a wider range of impacts than traditional financial materiality alone. This includes assessing supply chain impacts, community effects, and long-term environmental consequences that may not immediately translate to financial outcomes. The methodology demands more sophisticated data collection, stakeholder engagement processes, and analytical frameworks, pushing companies toward more comprehensive and transparent reporting.

Carbon Reduction Targets Surge Across Corporate Landscape

Perhaps no metric in KPMG’s survey illustrates the acceleration of corporate climate action more clearly than carbon reduction targets. A remarkable 95% of G250 companies now publish carbon reduction targets, representing a 15 percentage point increase since 2022. Among the broader N100 group, 80% have set carbon targets, up 9 percentage points over the same two-year period.

This surge reflects multiple converging forces. The Paris Agreement’s goal of limiting global warming to 1.5°C has created a scientific framework that companies increasingly translate into concrete reduction pathways. Initiatives like the Science Based Targets initiative (SBTi) have provided methodologies for setting credible targets aligned with climate science, while investor pressure through organizations like Climate Action 100+ has made carbon target-setting a boardroom priority.

The quality and ambition of these targets vary considerably. Some companies commit to net-zero emissions by 2050, while others set interim targets for 2030 or earlier. The KPMG survey suggests that regulatory frameworks like the CSRD, which requires detailed climate transition plans, are pushing companies beyond simple target-setting toward comprehensive decarbonization strategies that encompass Scope 1, 2, and increasingly Scope 3 emissions.

Regional differences remain significant. European companies lead in target-setting, driven by the EU’s regulatory environment and the European Green Deal. Companies in the Asia-Pacific region have shown the fastest growth rates in adoption, narrowing the gap with European counterparts. North American companies, while achieving high overall adoption rates, face a more fragmented regulatory landscape that creates varied levels of ambition.

GRI Dominance and Evolving Sustainability Reporting Standards

The Global Reporting Initiative (GRI) maintains its position as the world’s most widely adopted sustainability reporting standard. Three-quarters of G250 companies use GRI for their sustainability disclosures, with a nearly equivalent proportion among N100 companies. GRI’s universal standards, updated in 2021 to strengthen requirements around human rights, due diligence, and impact reporting, continue to serve as the baseline framework for corporate sustainability communication.

However, the standards landscape is becoming more complex. The Sustainability Accounting Standards Board (SASB) and various stock exchange guidelines have experienced the largest increases in adoption since 2022, albeit from lower starting bases. Regional patterns are pronounced: all surveyed companies in Saudi Arabia use its stock exchange sustainability guidelines, while two-thirds of companies in the Americas have adopted SASB standards. This regional fragmentation creates challenges for multinational companies that must navigate multiple overlapping frameworks.

The emergence of the International Sustainability Standards Board (ISSB) Standards adds another dimension to this evolving landscape. The ISSB aims to create a global baseline for sustainability disclosure that can be adopted or built upon by individual jurisdictions. As countries begin incorporating ISSB Standards into their regulatory frameworks, companies will need to assess how these new requirements interact with existing voluntary standards they already use.

The transition from voluntary to mandatory frameworks does not render existing standards irrelevant. GRI and other voluntary frameworks often provide more detailed guidance on specific topics and serve as important complements to mandatory requirements. The key challenge for companies is developing integrated reporting strategies that efficiently address multiple standards while delivering meaningful information to diverse stakeholders.

Sustainability Assurance and Third-Party Verification

As sustainability reporting matures, the demand for independent assurance of disclosed information is growing rapidly. KPMG’s survey documents a steady increase in companies seeking third-party verification of their sustainability data, mirroring the evolution of financial reporting where independent audits are standard practice. The CSRD’s explicit requirement for limited assurance of sustainability information, with a planned transition to reasonable assurance, is accelerating this trend.

The current assurance landscape reveals a market in transition. While many companies obtain some form of external verification, the scope and rigor of assurance engagements vary widely. Some companies limit assurance to specific metrics, such as greenhouse gas emissions data, while others seek comprehensive verification of their entire sustainability report. The type of assurance — limited versus reasonable — also differs, with limited assurance providing a lower level of confidence than the reasonable assurance standard used in financial auditing.

Building the capacity for robust sustainability assurance represents a significant challenge for both companies and assurance providers. Companies must implement internal controls and data management systems capable of producing assurance-ready sustainability information. This includes establishing clear data ownership, documentation practices, and audit trails that parallel those used for financial data. The investment required is substantial but increasingly viewed as essential for maintaining stakeholder trust and regulatory compliance.

Biodiversity Reporting Expands with Regional Variation

Biodiversity has emerged as the next frontier in sustainability reporting. KPMG’s survey shows that approximately half of both G250 and N100 companies now report on biodiversity impacts, a dramatic increase from roughly one-quarter just four years ago. This growth reflects rising scientific alarm about biodiversity loss, regulatory attention to nature-related risks, and the launch of frameworks like the Taskforce on Nature-related Financial Disclosures (TNFD).

The rate of growth has moderated in the last two years compared to the initial surge, suggesting that early adopters have already implemented biodiversity reporting while other companies face greater challenges in measuring and disclosing nature-related impacts. Unlike carbon emissions, which benefit from relatively standardized measurement methodologies, biodiversity metrics are inherently more complex, site-specific, and dependent on local ecological conditions.

Regional disparities in biodiversity reporting have narrowed since 2022. Companies in the Middle East and Africa have moved closer to the global average, indicating that awareness of biodiversity as a material business risk is spreading beyond the traditional sustainability reporting leaders in Europe and the Asia-Pacific. This convergence is encouraging, given that many of the world’s most biodiverse regions overlap with emerging economies where corporate reporting infrastructure may be less mature.

The TNFD recommendations, modeled on the TCFD framework, provide a structured approach for companies to assess and disclose their dependencies and impacts on nature. As these recommendations gain traction and begin to influence regulatory requirements, companies that have already established biodiversity reporting practices will be better positioned to comply with emerging mandates.

TCFD Adoption and Climate Risk Disclosure

The Task Force on Climate-related Financial Disclosures (TCFD) continues to shape how companies communicate climate risks and opportunities to investors and stakeholders. KPMG’s survey reveals that nearly three-quarters of G250 companies now report climate risks in alignment with TCFD recommendations, representing consistent year-over-year growth since the framework’s launch in 2017.

TCFD’s influence extends far beyond direct adoption. The framework served as a foundational input into both the ISSB Standards (particularly IFRS S2 on climate-related disclosures) and the ESRS under the CSRD. This means that companies already reporting under TCFD have a significant head start in complying with these newer mandatory frameworks. The structural alignment between TCFD’s four pillars — governance, strategy, risk management, and metrics and targets — and the newer standards creates a natural progression path.

Climate scenario analysis, a key TCFD recommendation, represents one of the more challenging aspects of implementation. Companies must model potential financial impacts under different climate scenarios, typically including pathways aligned with 1.5°C, 2°C, and higher warming outcomes. This exercise requires cross-functional collaboration between sustainability teams, finance departments, and strategic planning units, often revealing climate-related risks and opportunities that were previously underappreciated.

As TCFD is superseded by mandatory frameworks, its legacy lies in having established climate risk disclosure as a mainstream expectation. The framework demonstrated that climate-related information is decision-useful for investors and can be integrated into existing corporate reporting structures, paving the way for the more comprehensive mandatory requirements that are now taking effect.

ESG Governance and Leadership in the Boardroom

Effective sustainability reporting requires strong governance structures and dedicated leadership. KPMG’s survey documents significant progress on this front: 56% of G250 companies now have a designated sustainability leader, up 11 percentage points since 2022. Among N100 companies, 46% have appointed sustainability leaders, representing a 12 percentage point increase over the same period.

The integration of sustainability into executive compensation represents another important governance dimension. The survey found that 41% of G250 companies now consider sustainability performance in leadership pay, up modestly from 40% in 2022. Among N100 companies, 30% incorporate sustainability metrics into compensation, a 6 percentage point increase. While these numbers indicate progress, they also suggest significant room for growth in aligning financial incentives with sustainability outcomes.

Board-level oversight of sustainability issues has become increasingly sophisticated. Companies are moving beyond token sustainability committees to embed ESG considerations into core board activities, including risk oversight, strategic planning, and capital allocation decisions. This evolution reflects a growing recognition that sustainability risks — from climate change to social inequality — can have material financial implications that demand the same level of governance attention as traditional business risks.

The appointment of Chief Sustainability Officers (CSOs) and similar roles signals a structural shift in how organizations approach ESG. These leaders serve as bridges between sustainability strategy and business operations, ensuring that reporting commitments translate into operational changes. The effectiveness of this leadership depends on having genuine authority, adequate resources, and direct reporting lines to the CEO or board, rather than being positioned as a peripheral communications function.

Strategic Implications for Sustainability Reporting Programs

KPMG’s survey reveals a global corporate landscape in the midst of a profound transition. The shift from voluntary to mandatory sustainability reporting is reshaping how companies measure, manage, and communicate their ESG performance. For corporate leaders, several strategic imperatives emerge from the data.

First, early CSRD compliance delivers competitive advantages. Companies that proactively adopt mandatory requirements gain time to refine processes, build stakeholder confidence, and identify material sustainability issues before regulatory deadlines arrive. The survey evidence that many companies are already voluntarily adopting CSRD measures validates this approach.

Second, investing in data infrastructure is essential. The transition from narrative sustainability reports to data-driven disclosures — complete with third-party assurance — demands robust internal systems for collecting, managing, and reporting sustainability information. Companies that treat this as a technology investment rather than a compliance cost will be better positioned to extract strategic value from their sustainability data.

Third, the convergence of multiple reporting frameworks creates both challenges and opportunities. While navigating overlapping requirements from GRI, ISSB, CSRD, and various national frameworks is complex, companies that develop integrated reporting strategies can reduce duplication while delivering more comprehensive disclosures. The trend toward international harmonization, led by the ISSB, suggests that complexity will eventually decrease as standards converge.

Finally, the survey underscores that sustainability reporting is no longer a standalone exercise but an integral component of corporate strategy and governance. Companies with dedicated sustainability leaders, board-level oversight, and ESG-linked compensation are not only better reporters — they are better positioned to identify and capitalize on the business opportunities embedded in the sustainability transition.