Voluntary Reporting Frameworks Fail to Improve Sustainability Disclosures

Companies report more sustainability data but quality remains inconsistent

A recent study has found that voluntary sustainability reporting frameworks have not delivered the clear, consistent improvements in corporate disclosure that many expected. Despite a rapid expansion in reporting after 2015, the quality of information remains uneven across different types of data and between companies.

The research reveals a persistent gap between quantity and quality. Businesses are disclosing more indicators than ever before. However, the usefulness of that information varies considerably depending on what is being measured and who is doing the measuring.

For UK businesses navigating sustainability reporting requirements, the findings highlight an important reality. Adopting a framework does not automatically produce disclosure that is comparable or decision-useful. This matters for SMEs facing pressure from supply chain partners, tender requirements, and stakeholder expectations to demonstrate credible environmental and social performance.

Disclosure volumes increased sharply but quality gains were selective

Between 2014 and 2023, the number of publicly disclosed sustainability indicators rose by 52.4%. That increase reflects growing adoption of voluntary frameworks such as the Sustainability Accounting Standards Board standards and similar guidance designed to structure corporate ESG disclosure.

Climate-related reporting showed the strongest improvement during this period. Companies increasingly disclosed information about their carbon performance, responding to investor demand and regulatory signals around climate risk. Scope 1 and Scope 2 emissions reporting became more common and more detailed.

In contrast, value chain impacts and social indicators remained patchy. Information about environmental effects beyond a company’s direct operations, along with social outcomes such as labour conditions and community impacts, did not improve at the same rate. This unevenness limits the usefulness of sustainability reports for stakeholders trying to assess overall performance.

Consequently, the picture that emerges is one of selective progress. Frameworks appear to improve disclosure in areas where definitions are clearer and measurement is more established. Metrics that are harder to define or measure, particularly those involving complex supply chains, lag behind.

Performance gap between leaders and laggards narrowed significantly

One notable finding concerns the convergence between high and low performers. In 2014, companies in the bottom tier disclosed 39.4% fewer sustainability indicators than those in the top 10%. By 2023, that gap had shrunk to just 6.8%.

This narrowing suggests that weaker performers have caught up in terms of the volume of information they publish. However, convergence in quantity does not necessarily mean convergence in quality or accuracy. Companies may report more without providing the depth or comparability needed for meaningful assessment.

The trend reflects broader market pressure. Businesses that previously reported little or nothing have responded to expectations from investors, customers, and regulators by adopting some form of structured disclosure. Nevertheless, simply publishing more data does not resolve underlying issues of consistency or completeness.

For SMEs, this creates a dilemma. Reporting more indicators can demonstrate engagement with sustainability issues. Yet without attention to quality and relevance, increased disclosure may not satisfy the requirements of carbon reporting obligations or public sector procurement criteria.

Scope 3 emissions reporting continues to present challenges

Separate research confirms that Scope 3 emissions disclosure remains weaker than reporting for Scope 1 and Scope 2. Scope 3 emissions, which cover indirect emissions across the value chain, are harder to measure and require data from suppliers and customers.

Many companies struggle to gather accurate information about upstream and downstream impacts. This is particularly challenging for smaller businesses with limited resources or leverage over supply chain partners. As a result, Scope 3 reporting often relies on estimates or sector averages rather than specific data.

This gap matters because Scope 3 emissions typically represent the largest portion of a company’s carbon footprint, especially in sectors such as manufacturing, retail, and construction. Without credible Scope 3 disclosure, overall carbon reporting remains incomplete.

UK businesses facing net zero commitments or PPN 06/21 procurement requirements need to address this weakness. Regulators and procurement teams increasingly expect evidence of value chain emissions management, not just direct operational impacts. Therefore, improving Scope 3 measurement and disclosure is becoming a commercial necessity.

Voluntary frameworks supported material ESG disclosure but did not ensure comparability

Earlier research from Harvard Business School found that after SASB standards were released, firms increased disclosure of material ESG information by an average of 11.0%. This suggests that frameworks can improve reporting on issues they define as material to specific industries.

However, materiality-focused frameworks also create variability. Different standards emphasise different issues, and companies may interpret materiality in inconsistent ways. Consequently, even when businesses adopt the same framework, their reports may not be directly comparable.

Older survey evidence from KPMG warned that corporate carbon reporting often lacked consistency, making meaningful comparisons difficult. The latest study reinforces this concern. While reporting has become more widespread, it has not necessarily become more standardised or reliable.

For businesses, this presents both an opportunity and a risk. Frameworks provide structure and guidance, which can improve the quality of individual reports. Nevertheless, relying solely on voluntary standards may not produce the level of rigour required by regulators, investors, or procurement teams.

Regulators moved towards mandatory disclosure in response to voluntary system limitations

The uneven quality of voluntary reporting helps explain why regulators in Europe and elsewhere have introduced mandatory disclosure regimes. The EU’s Corporate Sustainability Reporting Directive and European Sustainability Reporting Standards represent a shift towards standardised, auditable requirements.

Mandatory systems aim to deliver comparability and completeness that voluntary frameworks did not consistently achieve. By setting clear rules about what must be reported and how, regulators seek to create a level playing field and reduce greenwashing risk.

UK businesses operating in or trading with the EU will increasingly encounter these requirements. Even companies not directly subject to CSRD may face questions from customers, investors, or supply chain partners who are. Understanding the direction of travel in regulatory expectations is therefore important for strategic planning.

Similarly, UK domestic policy is moving towards greater transparency requirements. The government has signalled intentions to strengthen climate-related disclosure obligations, building on existing requirements such as Streamlined Energy and Carbon Reporting. Businesses that prepare now by improving the quality of their sustainability data will be better positioned when mandatory rules tighten.

Social and value chain indicators remain weaker than climate metrics

The study notes that environmental impacts along the value chain and social indicators present a more mixed picture than climate performance disclosure. This reflects the complexity of measuring outcomes that extend beyond a company’s direct control or involve subjective judgements.

Social metrics, such as workforce diversity, health and safety performance, and community engagement, are harder to standardise than carbon emissions. There is less consensus on what should be measured and how, leading to greater variation in what companies report.

Value chain environmental impacts face similar challenges. Gathering data from multiple suppliers, often across different countries and regulatory environments, requires coordination and systems that many businesses lack. Small and medium enterprises in particular may find this burdensome without dedicated resources or support.

Nevertheless, stakeholders increasingly expect transparency on these issues. Public sector procurement often includes social value criteria. Investors assess supply chain risks related to labour practices and environmental standards. Therefore, businesses that improve their capacity to measure and report on social and value chain indicators will strengthen their competitive position.

Findings show standard-setting alone does not guarantee high-quality reporting

The research makes clear that the existence of frameworks and standards does not automatically produce rigorous, comparable sustainability disclosure. Companies must commit to gathering accurate data, applying consistent methodologies, and providing context that makes information meaningful.

This has practical implications for how businesses approach reporting. Choosing a framework is only the first step. Implementation requires investment in data systems, staff training, and processes that ensure information is reliable and complete. Training on sustainability reporting can help teams understand what good disclosure looks like and how to achieve it.

Moreover, businesses should focus on the quality of what they report, not just the volume. Publishing large numbers of indicators without attention to accuracy or relevance may satisfy superficial expectations but will not withstand scrutiny from informed stakeholders.

For SMEs, this means being selective and realistic. It is better to report fewer metrics well than to produce extensive but unreliable disclosure. Focusing on the issues that matter most to your business and your stakeholders will produce more useful and credible information.

What the evidence reveals about corporate sustainability disclosure

Several key points emerge from the study and related research. Taken together, they provide a clear picture of the current state of corporate sustainability reporting.

• Companies disclosed 52.4% more sustainability indicators between 2014 and 2023, reflecting widespread adoption of voluntary frameworks.
• Climate performance disclosure improved more than other areas, with carbon reporting becoming more detailed and common.
• Value chain environmental impacts and social indicators remain inconsistent, with many companies struggling to measure and report these areas effectively.
• The gap between low and high performers narrowed from 39.4% in 2014 to 6.8% in 2023, indicating convergence in reporting volume but not necessarily quality.
• Scope 3 emissions reporting continues to lag behind Scope 1 and Scope 2, limiting the completeness of corporate carbon disclosure.
• Voluntary frameworks can improve disclosure of material ESG information by an average of 11.0%, but do not consistently deliver comparability across companies.
• Regulators introduced mandatory disclosure regimes such as CSRD in response to persistent weaknesses in voluntary reporting systems.

Businesses should prioritise accuracy and relevance over volume of indicators

The evidence suggests that companies should focus on producing reliable, decision-useful information rather than simply reporting more indicators. This requires understanding what stakeholders need and ensuring that disclosure methods are robust.

For businesses subject to ESG compliance requirements, accuracy is particularly important. Inaccurate or incomplete reporting can create legal and reputational risks, especially as regulators increase scrutiny of sustainability claims.

Investing in data systems that support consistent measurement is essential. This might include emissions tracking software, supply chain data platforms, or internal processes that ensure information is verified before publication. While this requires resources, it reduces the risk of errors and makes reporting more efficient over time.

Additionally, businesses should consider how their reporting aligns with emerging regulatory standards. Even if mandatory requirements do not yet apply, understanding the direction of policy can inform decisions about which frameworks to adopt and how to structure disclosure.

Engaging with supply chain partners to improve data quality is also important, particularly for Scope 3 emissions and value chain impacts. Collaborative approaches, such as industry initiatives or shared data platforms, can reduce the burden on individual companies while improving overall transparency.

Further information on sustainability reporting and compliance

The UK government provides guidance on environmental reporting through the environmental reporting guidelines published by the Department for Energy Security and Net Zero. These outline requirements for Streamlined Energy and Carbon Reporting and offer advice on best practice.

The Financial Reporting Council publishes standards and guidance on corporate reporting, including sustainability disclosure. Their resources help businesses understand regulatory expectations and how to meet them.

For businesses seeking to improve their sustainability data and reporting systems, the government’s Greening Government Commitments offer practical examples of measurement and reporting approaches used by public sector organisations.

Industry bodies such as the Institute of Environmental Management and Assessment provide technical guidance and professional development resources for sustainability practitioners. Their materials can help businesses build internal capacity for rigorous reporting.