Global news headlines continue to sound an urgent call to action on climate change. CNN recently reported the top climate change story in 2021 was the wildfires in the western United States. Record drought conditions in the state of California’s 126-year history are blamed for the wildfires with losses in the billions of dollars. And the Colorado River, which provides a watershed for seven U.S. and two Mexican states, registered record-low water levels, forcing mandatory water rationing in 2022.

Climate change disasters like these are occurring globally. Unmanaged, they’ll raise companies’ risk and jeopardize society as we know it. Organizations and their stakeholders can no longer ignore reporting, and managing the factors that contribute to climate change impact demands a process of accountability through environmental, social, and governance (ESG) reporting. Global momentum to address climate change risks through ESG reporting has dramatically increased during the past two years.


eXtensible Business Reporting Language (XBRL) and its latest version, inline eXtensible Business Reporting Language (iXBRL), are ideal for providing consistent and comparable ESG information. The impact XBRL has had on digital financial reporting for more than 20 years can be carried over to ESG reporting to increase the accuracy, transparency, and accessibility of ESG information that stakeholders can rely on for decision making. It’s timely to explore the latest developments in ESG XBRL reporting, what management accountants need to know, and how they can support their organizations to prepare, measure, and report ESG metrics.

The role of XBRL in ESG reporting isn’t new. Several organizations have made pioneering efforts using XBRL structured data for ESG reports. They include the Global Reporting Initiative in 2007, the Spanish Accounting and Business Administration Association from 2006 to 2013, the Carbon Disclosure Project in 2017, and the Sustainability Accounting Standards Board (now the Value Reporting Foundation) in 2020.

While these initiatives are encouraging, widespread ESG reporting adoption was hampered because these efforts are based on different frameworks and assumptions and lack comparability. And most importantly, adoption was voluntary. As a result of the fragmentation and the absence of regulatory mandates, ESG reporting failed to gain traction for corporate reporting.

The European Union recognized the need for digital ESG reporting and moved with a sense of urgency in spring 2021 when it amended its 2014 Non-Financial Reporting Directive and renamed it the Corporate Reporting Sustainability Directive (CRSD). It enlisted the European Financial Reporting Advisory Group (EFRAG) to examine the need to develop ESG standards and to leverage digital technologies in the process. EFRAG recommended that sustainability standards should be developed in conjunction with an XBRL taxonomy to provide transparency and comparability like the EU’s European Single Electronic Format mandate for digital financial statement reporting with an effective date of January 2021 using iXBRL. The CRSD will apply to more than 49,000 companies, with an effective compliance date of October 2022.

While the EU took the lead with a directive for its member countries mandating ESG reporting, the missing puzzle piece to catapult ESG reporting to global corporate reporting’s center stage occurred at the United Nations Climate Change Conference in Glasgow in November 2021 when the International Accounting Standards Board announced the creation of the International Sustainability Standards Board (ISSB). Forbes said the development was the “the biggest change in corporate reporting since the 1930s.”

Despite the exciting recent progress, the road ahead for global ESG reporting faces many challenges. The ISSB is in its infancy: Standards must be developed, approved, issued, and implemented. A corresponding iXBRL ESG taxonomy must be created to operationalize the reporting requirement, and other jurisdictions must adopt ESG reporting mandates to achieve global ESG reporting. Notably absent is the position of the U.S. Securities & Exchange Commission (SEC) on a regulatory requirement for ESG reporting. Despite a 2010 SEC mandate requiring climate change disclosures, it hasn’t issued a mandate comparable to the EU’s CRSD. In January 2022, Paul Munter, the SEC’s acting chief accountant, said the SEC is watching developments in the EU and the ISSB closely and expects additional SEC climate change disclosure requirements soon. Whether or not that includes an XBRL reporting requirement aligned with the EU’s CRSD is unknown.


The opportunity for management accountants to contribute to their organization’s ESG initiatives is huge. The business axiom “what gets measured gets managed” captures the value proposition management accountants can add to ESG reporting. As Jeff Thomson, president and CEO of IMA® (Institute of Management Accountants), said, “Management accountants, who are responsible for reporting and disclosure, will be critical to establishing more transparency and building more sustainable operations within their organizations in a way that translates into strategic action.”

Raef Lawson, chair of the IMA Research Foundation, echoes this message, calling on management accountants to play a leadership role because their expertise allows them to provide a holistic view of the organization to lead collaborations focused on long-term performance and value creation.

These messages should empower management accountants to take steps to ensure their organizations are ready to pivot to ESG reporting because they understand their organization’s nonfinancial reporting information, a major source of ESG information, and are experts in gathering and analyzing data necessary for decision making.

In your role as a management accountant, partner with other departments to identify ESG reporting metrics, collect data, prepare reports, and comply with regulatory requirements. With ESG reporting requirements emerging, start to examine relevant information applicable to your company. Despite the lack of specific guidance, you can begin researching how other companies in your industry are reporting ESG matters and develop an action plan for reporting and compliance. Follow developments and familiarize yourself with XBRL reporting solutions. If your company isn’t preparing voluntary ESG reports, start now. There are many excellent examples such as Ball Corporation and SAP. It isn’t a question whether ESG reporting will be required, just a matter of when.

The views expressed in this article are those of the author and do not necessarily reflect the official policy or position of the Air Force, the Department of Defense, or the U.S. Government. Distribution A: Approved for Public Release, Distribution Unlimited. USAFA-DF-2022-34.

About the Authors