Focus on sustainability: Reporting comes to the forefront

25 March 2024

Keith Nuthall reports for PPCJ on how the paint and coatings sector is facing a comprehensive shift towards sustainability reporting 

The paint and coatings industry is facing a major change in how it reports its activities to regulators and commercial partners, with sustainability reporting systems being formalised, internationalised and in some jurisdictions being made mandatory. 

Indeed, 2023 was a major year for sustainability reporting systems, which tell companies how to declare their exposure to environmental and social trends and their own impact on the world around them, both directly and indirectly through their purchases and sales and via their supply chains. 

Of critical importance was the launch of the first two International Sustainability Standards Board (ISSB) reporting standards – IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information [1] and IFRS S2 Climate-related Disclosures. As of January 1, 2024, they are now in force. 

Similar to the International Financial Reporting Standards (IFRS) maintained by the ISSB’s sister organisation, the International Accounting Standards Board (IASB), these standards will need to be adopted by governments to become mandatory. And that is starting to happen: Brazil in December has confirmed plans to insist companies in its jurisdiction issue ISSB reports from January 2026, having already authorised voluntary use by public companies and investment funds from 2024. Meanwhile, Britain and Japan have said they will release mandatory reporting standards that closely follow ISSB.  

In the meantime, paint companies may find ISSB reports useful to demonstrate their social and environmental good practice for marketing and to demonstrate to investors that they are not financially exposed to tightening environmental controls and climate risk. 

Companies in the European Union (EU) are facing legislation that has already made sustainability reporting mandatory and in this case, following European Sustainability Reporting Standards (ESRS) [3] that are broader than ISSB. While these have been drafted with an attempt to minimise divergence from ISSB, there is a major difference in scope. The EU has opted for a ‘double materiality’ reporting system, adding the impact of business and industry on the environment and climate change to the ISSB’s single materiality focus on the environment’s impact on corporations.  

ESRS-based declarations will become mandatory for large EU listed companies from 2025. Listed small-and-medium-sized companies and non-EU companies should have until June 2026 to start gathering sustainability data, under new proposals agreed by MEPs and EU ministers in January. The same will apply to major listed EU companies for sector-specific ESRS developed by EFRAG (the European Financial Reporting Advisory Group) [4].  


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Meanwhile, efforts are being made to dovetail both ISSB and ESRS with sustainability reporting models developed by the Global Reporting Initiative (GRI) [5], which is the only major sustainability reporting system that has remained independent of the two other systems. The ISSB has subsumed former international sustainability reporting systems, notably sector-specific models developed by the SASB – the Sustainability Accounting Standards Board [6]. Now formally adopted by the ISSB, SASB standards include a chemicals standard, which is now being refined as a refined sectoral ISSB standard [7]. 

As with IFRS, the USA is going its own way with sustainability reporting, and focusing on single materiality, with a new rule released by the Securities & Exchange Commission (SEC) on March 6 setting out requirements for publicly listed companies to report their climate-related risks and, in some cases, their greenhouse gas emissions. These companies will have to report climate-related risks that have had or are reasonably likely to have a material impact on business strategy, operations and finances. And they will have to report activities mitigating against these risks, including how much companies are spending on them [8]. 

David Park, Public Affairs Manager, British Coatings Federation (BCF), said sustainability reporting meshed with the UK industry’s goal, as set by the BCF in 2012 to become ‘net zero’ by 2050, This has been underpinned by a BCF ‘roadmap’ advising on practical steps, such as carbon emission calculations and reporting [9]. 

To meet this goal, “we do need to see regular recording and reporting of emissions by companies,” said Mr Park: “This is vital to measure progress towards achieving that overall aim, with interim targets set along the way. Such measuring and reporting allow companies to focus on areas that they can deal with directly.” 

He added that reporting can help guide government towards what help companies need to achieve net zero, for instance by creating greener energy grids or promoting sustainable technologies, such as green hydrogen. “Moreover, putting key performance data out in the sunlight ensures the subject cannot be ignored. So, reporting helps keep the focus of both private and public sector alike,” said Mr Park. 

As reporting regimes are developed, he advised that reporting “needs to be kept as simple as possible”, given smaller companies (a considerable proportion of the paint and coatings sector) will increasingly have to make sustainability reports, following earlier requirements for larger companies. With the ISSB pushing its worldwide standard, Mr Park said: “In an ideal world, there would be a global standard to simplify returns for multinationals, avoid poor comparisons between countries and allow businesses to more readily understand how their supply chains were performing.” However, he warned that in introducing a single, standardised system, there should not be “a reduction in data quality”.  

Accurate standardised data will help governments, companies, and investors “see clearly how individual companies are performing on key environmental targets”, said the BCF manager, who added that industry associations can and should help members navigate sustainability reporting systems. The BCF has hosted webinars on the topic and hosts educational in-person events. 


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The European Union (EU) association CEPE (The European Council of the Paint, Printing Ink, and Artist’s Colours Industry) has also developed tools helping the industry assess its sustainability performance. For instance, it offers the CEPE LCI (Life Cycle Inventory) project to provide members with a harmonised (LCI) database for the paint and coating industry’s most important raw materials and three manufacturing processes. These data are offered in three formats: SimaPro, GaBi and Excel, said a CEPE note [10].  

It has also developed a Product Environmental Footprint (PEF) tool enabling companies to assess the sustainability impact of a product, having input some basic data, such as a bill of materials and VOC content [11].  

The American Coatings Association (ACA) said of the new SEC sustainability reporting rule requiring publicly traded companies to report climate-related disclosures: “There have been significant changes in the final rule.” The association added that companies also must follow US state-level reporting regulations, noting that among states “there is significant divergence in philosophy and legislative strategies about ESG reporting”. More conservative states are exploring ‘anti-ESG measures’, while [liberal] California has already enshrined specific requirements in law but has not yet developed detailed regulatory guidance for such reporting, noted the ACA. “Consequently, the legal and legislative landscape is still very fluid and as such, ACA continues to monitor activity for impacts on industry and will continue to promote awareness and of compliance obligations to its members.” 

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