Investors and stakeholders of business information today are looking beyond the financial performance of an entity to what effect its actions have on the environment and society in which it operates. Sustainability reporting helps entities communicate how their activities affect their external environment and the risks they face from that environment.
A number of sustainability disclosure frameworks exist at this point. They include the SASB* Standards, the TCFD* framework, and the GRI* standards. However, the newly-created ISSB* is attempting to merge several of those frameworks due to the highly fragmented nature of ESG reporting and the resultant lack of comparability.
XBRL was chosen for the convenience the format offers in accessing, analyzing, and comparing financial information by simply facilitating the production of machine-readable information. In 2018, the SEC updated its mandate to replace XBRL with the more advanced Inline XBRL (iXBRL) as the new medium for receiving corporate filings into the EDGAR system.
*Sustainability Accounting Standards Board (SASB); Task Force on Climate-Related Financial Disclosures (TCFD); International Sustainability Standards Board (ISSB).