VoxTalks Economics S8 Ep61: The politics of sustainability reporting
Nov 21, 2025
Lucrezia Reichlin, an esteemed economist and expert in corporate reporting, discusses pivotal issues surrounding sustainability reporting and the ISSB initiatives. She delves into the need for standardized corporate disclosure and the challenges posed by differing regulations in the US and Europe. Reichlin also highlights the debate between investor-focused and double materiality approaches, and how emerging markets are embracing sustainability standards. Plus, she examines the impact of these regulations on corporate behavior and the importance of consistent measurement in addressing climate change.
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Standardisation Lowers Investor Costs
- Standardised corporate disclosure reduces investors' information processing costs and improves valuation comparability.
- Lucrezia Reichlin argues this makes mandatory standards necessary because voluntary disclosure underprovides public information.
Standards Need Institutions To Work
- The effects of adopting IFRS depended heavily on enforcement and supporting institutions.
- Reichlin highlights large heterogeneity in outcomes and warns reporting must complement other policies, not replace them.
ISSB Creates A Global Baseline
- The ISSB was created to consolidate many voluntary sustainability frameworks into a global baseline focused on financial materiality.
- The intention was to make sustainability disclosures interoperable with IFRS and allow more ambitious jurisdictions to add broader 'double materiality' requirements.