Aligning IFC Disclosure Requirements with Other International Standards

Authors: Ralitza Germanova | Vladimir Hrle | Charles Canfield | Caroline Bright

International Finance Corporation

 

The March, 2025 edition of ‘The Hub’ highlights a handbook published by the International Finance Corporation (IFC) which explores the alignment of IFC's Disclosure and Transparency (D&T) Framework with major international ESG reporting standards, including the International Sustainability Standards Board (ISSB), European Sustainability Reporting Standards (ESRS), and Global Reporting Initiative (GRI). The document highlights the growing need for standardized ESG reporting in emerging markets and the importance of harmonization between different frameworks to facilitate compliance and improve sustainability disclosures.

Purpose and Scope
 

The primary aim of the benchmarking assessment is to support IFC D&T Framework users—companies, banks, stock exchanges, regulators, and other stakeholders—by identifying alignment areas with global standards. The report emphasizes the need to enhance ESG reporting in emerging markets, reduce administrative burdens, and prevent greenwashing by ensuring robust and transparent reporting mechanisms.

IFC’s D&T Framework consists of:

 

• D&T Toolkit: Beyond the Balance Sheet
• IFC Performance Standards on Environmental and Social Sustainability (IFC PSs)
• IFC Corporate Governance Methodology
• IFC Climate Governance Progression Matrix

Key Findings on ESG Reporting Alignment

 

IFC and ISSB Alignment
 

• Strong alignment in governance, strategy, and risk management but weaker alignment on specific metrics and targets.
• The IFC’s four-pillar system (Governance, Strategy, Risks & Opportunities, and Performance, Metrics & Targets) aligns well with ISSB’s reporting structure.
• The IFC Corporate Governance Methodology closely follows IFRS governance reporting requirements.

IFC and ESRS Alignment
 

• ESRS reporting standards are more prescriptive, providing clearer guidance on disclosure expectations.
• Strong alignment in governance and strategic disclosure but some gaps exist in reporting practices for specific ESG topics, such as lobbying, bribery, and payment transparency.
• The IFC D&T Framework aligns well with ESRS environmental and social standards but requires additional clarity for reporting under ESRS governance-related topics.

IFC and GRI Alignment
 

• The IFC D&T Toolkit and Corporate Governance Methodology show some alignment with GRI’s general disclosures and material topics.
• The IFC Performance Standards (IFC PSs) align strongly with GRI’s environmental (GRI 300s) and social (GRI 400s) standards.
• Weak alignment with GRI’s economic performance standards (GRI 200s), requiring additional guidance to enhance financial disclosures.
   

Challenges in Emerging Markets

 

Through stakeholder engagement, key challenges in ESG reporting were identified in a survey are as follows:

 

• 81% of respondents cited multiple and varying reporting requirements as a challenge for emerging market users.
• 75% discussed the need for interoperability between standards to ease compliance.
• 63% highlighted materiality as a key issue, with varying interpretations between financial and impact materiality.
• 56% noted data availability as a challenge in preparing ESG reports.
• 50% recommended a reporting template to improve understanding and consistency in disclosures.

Recommendations and Future Direction

 

To enhance ESG reporting in emerging markets, the IFC proposes:

 

• Further alignment of the IFC D&T Framework with ISSB, ESRS, and GRI standards.
• Increased collaboration between standard setters to ensure consistency and reduce reporting burdens.
• Development of sector-specific guidelines to provide tailored ESG reporting assistance for different industries.
• Creation of standardized reporting templates to facilitate compliance and reduce complexity.
• Strengthening data availability and collection mechanisms to improve the accuracy and reliability of sustainability reports.

The IFC D&T Framework serves as a valuable tool for emerging market companies navigating ESG reporting. By aligning with international standards, the framework ensures that businesses remain compliant while also meeting the growing investor demand for transparency and accountability in sustainability disclosures. Continued collaboration and refinement of reporting frameworks will help bridge gaps, reduce administrative burdens, and promote sustainable business practices globally.

Note: IICA duly acknowledge the ownership / authorship of the Handbook and republishing the same only for educational purpose of Independent Directors.