2024: A Turning Point for ESG Reporting
2024 marked a critical threshold in the transformation of ESG reporting from a voluntary exercise in good faith to a mandatory compliance requirement. In Europe, the first CSRD implementations began. Concrete lessons emerged from the CBAM transitional period. ISSB standards entered the global adoption phase. And Turkey formally established its own sustainability reporting infrastructure.
This report evaluates the principal developments of 2024 and outlines the outlook for 2025.
Part 1: CSRD — First Wave Implementation
What Happened in 2024?
The Corporate Sustainability Reporting Directive (CSRD) is the European Union's regulation fundamentally transforming sustainability reporting. Enacted through Directive 2022/2464, the CSRD requires companies to report sustainability information in accordance with European Sustainability Reporting Standards (ESRS) (European Parliament and Council, Directive 2022/2464, OJ L 322, 16.12.2022).
Under the first wave, large public-interest entities already within the scope of the Non-Financial Reporting Directive (NFRD) — listed companies with more than 500 employees, banks, and insurance companies — became obligated to produce CSRD-compliant reporting for the 2024 financial year. These reports will be published in 2025.
First Wave Observations
Key observations from companies' CSRD preparation processes in 2024:
Double materiality assessment challenges: The double materiality assessment required by ESRS mandates simultaneous evaluation of both financial impact and environmental/social impact. Many companies struggled to translate this conceptual framework into an operational process.
Data collection infrastructure gaps: The data granularity required by ESRS exceeded the capacity of existing reporting systems in most cases. Data gaps were identified particularly in Scope 3 emissions, biodiversity indicators, and social metrics.
Maturation of the assurance market: The limited assurance mandate required audit firms to rapidly expand their sustainability assurance capabilities. Both major audit firms and mid-tier firms invested in this area.
ESRS scope and materiality filters: The initial ESRS set presented a comprehensive framework with twelve standards and hundreds of disclosure requirements. However, it became clear through materiality assessments that companies were not required to apply all standards. This created a significant opportunity for focus during preparation.
Sectoral Differences
Sectoral maturity differences in CSRD preparedness were pronounced. The energy, mining, and financial sectors were comparatively better prepared due to prior voluntary reporting experience, while deeper compliance gaps were observed in retail, technology, and industrial sectors.
Part 2: CBAM — Lessons from the Transitional Period
Transitional Period Assessment
The EU's Carbon Border Adjustment Mechanism (CBAM) reached full operational status in 2024 following the transitional period that began on October 1, 2023. Under Regulation 2023/956, importers are obligated to submit quarterly reports (European Parliament and Council, Regulation (EU) 2023/956, OJ L 130, 16.5.2023).
Key lessons from the 2024 transitional period implementation:
Limits of default value usage: The European Commission restricted default value usage to twenty percent of total embedded emissions from July 31, 2024, onwards. This underscored the importance of facility-level actual emissions data collection capability.
Exporter-importer communication challenges: Embedded emissions data requests created a new communication dynamic across supply chains. Producers in many exporting countries, Turkey included, found themselves responding to data requests from EU importers for the first time.
Commission reporting platform evolution: Technical issues and user experience shortcomings of the CBAM Transitional Registry improved gradually throughout the year. The European Commission documented these improvements in its implementation reports (European Commission, "Report on the functioning of the CBAM during the transitional period," 2024).
Assessment for Turkey
Turkey is among the EU's largest trading partners for CBAM-covered products. Exporters in the steel, aluminium, and cement sectors began developing embedded emissions calculation and reporting capabilities in 2024. However, a significant gap remains in facility-level verified data production capacity.
Part 3: ISSB — The Global Adoption Wave
The Spread of IFRS S1 and S2
The International Sustainability Standards Board (ISSB) advanced the global adoption phase of IFRS S1 (General Requirements) and IFRS S2 (Climate-related Disclosures), published in 2023, throughout 2024. According to the IFRS Foundation's 2023 annual report, multiple jurisdictions have initiated the process of integrating these standards into their national reporting frameworks (IFRS Foundation, Annual Report 2023).
Notable 2024 developments in ISSB adoption:
- United Kingdom: The Financial Conduct Authority launched a consultation process for creating UK-endorsed ISSB standards
- Japan: The Sustainability Standards Board of Japan (SSBJ) published a draft national standard aligned with ISSB
- Australia: The Australian government enacted mandatory ISSB-aligned climate reporting legislation
- Brazil: The Comissao de Valores Mobiliarios (CVM) announced its ISSB integration plan
- Canada: The Canadian Sustainability Standards Board began adapting ISSB to the Canadian context
ISSB-ESRS Interoperability
In 2024, ISSB and EFRAG published the interoperability mapping between the two standard sets. The fact that both frameworks build on TCFD recommendations created significant common ground. However, the fundamental difference between ESRS's double materiality approach and ISSB's investor-focused financial materiality approach elevated the concept of "interoperability" over full convergence — meaning companies will continue to need to manage multiple frameworks simultaneously.
Part 4: Turkey — Climate Law and TSRS
Climate Law No. 7552
2024 was a historic turning point for Turkey's climate policy. Climate Change Law No. 7552 is the first comprehensive regulation to place Turkey's climate targets within a legal framework (Climate Change Law No. 7552, Official Gazette).
The law's principal components:
- Establishment of an Emissions Trading System (TR-ETS): Legal foundation for Turkey to create its own carbon market. Pilot period preparations will begin in 2025.
- Greenhouse gas monitoring, reporting and verification (MRV): Expansion of facility-level emissions reporting and verification obligations.
- Climate change adaptation: National adaptation planning and sectoral adaptation strategies.
This law also carries strategic significance for Turkey's potential to reduce EU CBAM obligations: the existence of a national carbon pricing mechanism could allow CBAM certificate costs to be reduced for exports.
TSRS — Turkey Sustainability Reporting Standards
The Public Oversight Accounting and Auditing Standards Authority (KGK) published the Turkey Sustainability Reporting Standards (TSRS) aligned with ISSB standards. TSRS 1 (General Provisions on Disclosure of Sustainability-Related Financial Information) and TSRS 2 (Climate-Related Disclosures) ensure Turkey's alignment with international reporting frameworks (KGK, TSRS Communiques, 2024).
In the 2024 reporting period, public interest entities meeting certain size criteria became obligated to produce TSRS-compliant reporting. This represents the effective beginning of mandatory sustainability reporting in Turkey.
Initial TSRS Implementation Observations
Key findings from the first TSRS implementation period:
- A significant proportion of listed companies do not yet possess the data collection infrastructure to meet TSRS requirements
- Climate-related risk and opportunity assessment and scenario analysis requirements have been the most challenging areas
- Audit and verification capacity needs to be expanded
- ISSB alignment has provided framework consistency for the Turkish operations of multinational companies
Part 5: SBTi — Developments and Debates
2024 Progress Report
SBTi recorded significant increases in target commitments and validations in 2024. According to the SBTi Progress Report, more than four thousand companies globally hold validated science-based targets (SBTi, "SBTi Progress Report 2024," 2024).
Key 2024 developments:
- 1.5-degree alignment became mandatory
- FLAG guidance was fully integrated
- Corporate Manual v2.1 was updated
- The BVCM (carbon credit) debate shook the sector
The Carbon Credit Controversy
One of the year's most contentious developments was SBTi's April 2024 announcement that it was evaluating the use of carbon credits within Scope 3 target compliance. This announcement raised serious questions about SBTi's scientific credibility and led to resignations from the Technical Advisory Council.
The corrective statement in July 2024 clarified that carbon credits would not count as a substitute for emissions reductions. However, this episode exposed the fragility of the science-based target-setting ecosystem and the importance of managing stakeholder expectations.
Part 6: CDP — 2024 Disclosure Statistics
CDP's 2024 global disclosure statistics demonstrate that environmental transparency is gaining momentum. According to CDP data, more than 23,000 companies disclosed environmental data in the 2024 cycle (CDP, "CDP Global Disclosure Statistics 2024," 2024).
Notable trends:
- The number of suppliers requested to provide data through the supply chain programme increased
- Climate questionnaire response rates showed an upward trend
- Participation in water security and forests questionnaires grew
- Work on data alignment between CSRD and CDP commenced
CDP and EFRAG published the mapping between ESRS and the CDP questionnaire in 2024. This mapping aims to facilitate companies within the CSRD scope leveraging their ESRS data when preparing CDP responses.
Part 7: 2025 Outlook
CSRD Second Wave
The CSRD's second wave will come into effect in 2025. The second wave covers large companies with more than 250 employees or exceeding certain revenue and balance sheet thresholds. This represents a significant increase in the number of affected companies. Second-wave companies will publish their first CSRD-compliant reports in 2026, based on 2025 financial year data.
This wave is expected to be the CSRD's real test: while most first-wave companies already had NFRD experience, many second-wave companies will be subject to sustainability reporting for the first time.
CBAM Default Value Phase-Out
The CBAM transitional period will continue in 2025. However, default value usage will be further restricted and the expectation of facility-level actual emissions data will increase. Exporters must complete their verification infrastructure ahead of the definitive period starting in 2026.
The European Commission's findings in CBAM implementation reports indicate that preparations for the definitive period transition need to be accelerated (European Commission, "CBAM Implementation Report," 2024).
TR-ETS Pilot Preparations
Preparations for the pilot period of Turkey's Emissions Trading System will begin in 2025. Pilot studies, coordinated by the Ministry of Environment, Urbanisation, and Climate Change, will include determining sectors in scope, designing allocation methods, and strengthening MRV infrastructure.
The design of TR-ETS is critically important for compatibility with the EU ETS. Recognition of a national carbon price under CBAM will have direct financial implications for Turkish exporters.
ISSB Jurisdictional Adoption
Jurisdictional adoption of ISSB standards will accelerate in 2025. Beyond Australia, the United Kingdom, Japan, Brazil, and Canada, regulators in Southeast Asia and the Middle East are also expected to advance their ISSB integration work.
Turkey's early adoption of ISSB through TSRS has provided a positive positioning in terms of regional competitive advantage.
SBTi BVCM Guidance Publication
SBTi's Beyond Value Chain Mitigation (BVCM) guidance is expected to be finalised in 2025. This guidance will frame the debate around carbon credit use, helping companies plan their emissions reduction and climate finance strategies in tandem.
ISSA 5000 Standard
The IAASB's sustainability assurance standard ISSA 5000 is planned for finalisation in 2025. This standard will shape the practical application of CSRD assurance requirements and set the quality bar for sustainability assurance engagements globally.
Part 8: Strategic Assessment
Regulatory Convergence
The most prominent trend of 2024 was the convergence of global regulatory frameworks. Interoperability work between CSRD-ESRS, ISSB-IFRS S1/S2, TSRS, and CDP holds potential to alleviate "standards fatigue." However, the target is interoperability rather than full convergence — meaning companies will continue to need to manage multiple frameworks simultaneously.
The Central Role of Data Infrastructure
The implementations of 2024 once again demonstrated that the success of sustainability reporting is directly proportional to the quality of data infrastructure. Manual data collection processes, spreadsheet-based calculations, and documentation gaps were the most common bottlenecks in both reporting and assurance processes.
The Capacity Gap
Capacity gaps — both in internal sustainability teams and external service providers (audit firms, consultancies) — were among the most critical issues of 2024. The simultaneous impact of CSRD, CBAM, and TSRS has rapidly increased demand for qualified human resources.
The Value Creation Opportunity
Mandatory reporting presents a value creation opportunity beyond compliance costs. Systematic emissions data collection has revealed process efficiency improvements. Climate risk assessments have enriched strategic planning processes. Transparent reporting has strengthened investor confidence.
Conclusion: Building the Bridge from 2024 to 2025
2024 was the year ESG reporting transitioned from "regulation on paper" to "implementation in the field." The CSRD's first wave, CBAM transitional period lessons, ISSB's global spread, and Turkey establishing its own framework through TSRS have laid a solid foundation for 2025.
2025 will be a year of building upon that foundation. The CSRD second wave, CBAM's approach toward the definitive period, TR-ETS pilot preparations, and the publication of ISSA 5000 are the principal agenda items that will keep reporting teams engaged.
Action Item: Build your 2025 compliance calendar. Which regulations apply to your company? Which reporting cycles do you need to prepare for? Consolidate CSRD, CBAM, TSRS, and CDP dates into a single calendar and plan your resource allocation accordingly.