Do the standards finally speak one language?

For a long time a company could become a B Corp by adding things up. The B Impact Assessment awarded points for governance, workers, community, environment and customers, and anyone who scored above 80 was in. A weak theme simply disappeared into the total. A firm that paid its staff poorly could make up for it with a strong environmental policy. Under the new B Corp standards, which came into force in 2026, that no longer works. A company now has to meet a minimum on every theme. Points in one theme can no longer make up for a shortfall in another.

That change did not happen in isolation. It coincides with a wider movement in which the main sustainability and impact standards are drawing closer together. People call it harmonisation. Anyone reading reports from the past few years will find the word everywhere, and will rarely find out what it means. So this piece tries to explain it. Whether it is good that everything grows towards one measure is a question for two other pieces. They take a position; here we describe what is happening.

Our special ‘From logframe to alphabet soup’ tells how the drawer of acronyms got so full. It also says when each standard arrived. This piece is about how rather than when: how do the standards connect, and what lies underneath?

There are now two large families. One is the ISSB’s, under the IFRS Foundation, the body behind the accounting rules of more than a hundred countries. The other is European: the CSRD and the ESRS, drafted by EFRAG, the European Financial Reporting Advisory Group. They look at the same world in different ways.

The ISSB looks from the investor’s seat. Information matters if investors and lenders can reasonably expect it to sway their decisions. The question is what sustainability does to the company: a flood that hits a factory, a carbon price that squeezes the margin. The ESRS look both ways. They also ask what the company does to people and the environment, whether or not it costs money. The name for this is double materiality.

Harmonisation here does not mean the two views merge. It means they connect where they overlap. In May 2024 the IFRS Foundation and EFRAG published joint guidance showing how a company can meet both, particularly on climate. The financial side of the European approach to materiality lines up with the ISSB’s definition. A company following the ESRS can also meet the ISSB on climate with a limited number of extra points. This is not a ruling that the two are equivalent. Differences remain, and the guidance says so.

GRI covers the impact side. Where the ISSB looks at the company, GRI looks at the consequences for the world. EFRAG and GRI see a high degree of overlap between the ESRS and the GRI Standards for impact reporting. They set it out in an index that shows, item by item, where they meet. Since 2024, GRI and the IFRS Foundation have also been working on connecting their standards. What emerges looks more like a network of bridges than a single building. The ISSB itself calls its standards a baseline on which countries may add requirements of their own.

Behind all these agreements sit a few principles that keep coming back. They are more useful to know than the acronyms, because they explain why the acronyms are converging.

The first is double materiality. In the ESRS it is a requirement. A topic counts if it matters for the world, for the company, or for both. How severe is an effect for the people it touches? The ESRS judge that in the language of the UN Guiding Principles on Business and Human Rights. How large is it, how widespread, and how hard to put right? Anyone who works in impact will recognise the five dimensions of the Impact Management Project here. What changes, for whom and by how much? What is your own contribution, and how great is the risk that things turn out differently? The IMP was not a standard. It was a place where organisations agreed on how to talk about impact. That shared grammar now turns up in standards that never mention it by name.

The second principle is comparability. Both the ESRS and the ISSB ask for information that is relevant, faithful, comparable, verifiable and understandable. Comparability is the reason harmonisation exists at all. A financier backing ten organisations does not want to learn to read ten kinds of report. A resident who wants to know whether the company down the road is emitting less gets nothing from a definition that shifts every year.

The third we call traceability. The standards say verifiability: someone else must be able to check that a figure is right. For us that also includes the way back, to the measurement, the source and the assumption. The CSRD asks an auditor to check the report, with limited assurance. That turns traceability from good practice into an obligation.

There is a fourth, which rarely gets a name: no netting. What one group gains does not cancel out what another loses. GRI starts from it and the ESRS assess the two separately. The new B Corp requirements make it a hard rule. This is where the opening example returns. A total score is easy to compare, but it hides where things chafe. Harmonisation has not traded visibility for comparability. Whether that is why B Lab changed its requirements, we cannot say for certain. B Lab mostly points to what companies and stakeholders told it. But the direction is the same.

Harmonisation sounds like something for listed companies. Yet it also reaches the charity shop and the twenty-person installation firm, through a questionnaire from a bank or a large customer. For them there is the VSME, the voluntary standard for small and medium-sized firms. How it came about, and how the Omnibus moved the CSRD boundary, is told in the special. What interests us here is the mechanism. Smaller firms in the value chain may decline requests that go beyond the voluntary standard. Here harmonisation works as a ceiling. A small firm need not fill in more than that one form, however often the request comes.

At the same time the ESRS themselves are shrinking, with well over half fewer mandatory datapoints. So harmonisation does not only mean more coherence. It also means fewer questions. Fewer questions are not the same as more coherence. A ceiling protects the small organisation from ten different forms, but it also decides what that one form no longer asks.

After all these agreements it is tempting to think the language is now finished. It is not, and the standards say as much themselves. Harmonisation aligns the questions and the way you answer them. It does not align the context that gives a figure its meaning. Helping six in ten participants into work means one thing in one neighbourhood and something else in another. In a harmonised report both figures sit in the same column. That is the intention, but it also hides the difference between the neighbourhoods.

There is also still a difference in who is reading. The ISSB writes for investors. The ESRS and GRI also write for the people who feel the consequences. In the end a report is for every rights holder and stakeholder: participants, residents, partners, the council, and financiers too. No standard can ask the right question for all those readers at once. So the two companion pieces look at what happens when people push a single measure too far. They also ask what there is to gain from difference.

The principles often help more than the standard itself. Some organisations understand why one group’s gain does not cancel out another’s loss. They write a more honest report than those that just fill in the boxes. If an organisation says where every figure comes from, you can put its report next to another. That holds even when the measure differs a little.

At heart, harmonisation is about trust between strangers. If an investor in Singapore and a resident in Delft can read the same figure, they do not need to know each other. That only works if the figure states its own limits. A report that says where it is unsure, which impact it could not measure and which assumption it made is therefore no less harmonised. It is easier to compare, because you know where the difference lies. So the doubt belongs in the text itself.