ECGI paper links mandatory sustainability reporting to wider board duties

A September 2026 working paper from the European Corporate Governance Institute finds mandatory sustainability reporting is widening what directors must oversee, even where company law has added no new ESG obligations.

The paper, by Luh Luh Lan, an associate professor at the National University of Singapore, calls the mechanism a 'disclosure-duty feedback loop,' ESG News reports. As companies publish sustainability risks, targets and oversight arrangements, those disclosures shape expectations of how boards behave, the study argues, producing greater accountability for governance processes while keeping directors legally distinct from guarantors of environmental outcomes.

The obligations also create operational duties: companies must build reliable data collection, verification and internal control systems, and directors must oversee those processes and understand the environmental and social risks behind the reported figures, according to the paper.

Once disclosures are published, they become benchmarks. A company that has described detailed climate oversight arrangements may face scrutiny if those arrangements deteriorate or remain unimplemented, the paper says. Earlier disclosures shape expectations of later oversight while reporting obligations shape governance practice.

The mechanism runs through existing directors' duties rather than creating an independent legal obligation to achieve any particular ESG outcome, according to the paper.

The paper compares ISSB frameworks, European sustainability reporting requirements and US disclosure rules. ISSB standards supply a common baseline across jurisdictions including Singapore and the UK, ESG News reports. Listed companies in Singapore must report Scope 1 and Scope 2 emissions from financial year 2025, and Straits Times Index constituents face Scope 3 requirements from 2026. The UK published its sustainability reporting standards in February 2026, and regulators have consulted on mandatory implementation beginning in 2027.

The European Union has narrowed the Corporate Sustainability Reporting Directive through Omnibus I, with the revised framework generally targeting companies with more than 1,000 employees and €450 million in turnover. Double materiality stays: in-scope companies must assess both financial sustainability risks and their impacts on people, the account says.

For boards, the practical weight of the loop sits in the data and controls behind the numbers rather than in the disclosure text itself. This publication described the compliance layer when the revised ESRS reached the EU's Official Journal in September. A separate UK consultation, which this publication covered, would trade ESG checklists for board judgment, making directors' materiality views the gate for what gets reported.