XBRL (eXtensible Business Reporting Language) represents a global standard for consistent, comparable reporting of financial information, with the vast majority of companies in leading jurisdictions required to report in this digital format.

Yet as countries across the world adopt standards for disclosure of sustainability- and climate-related information, the format for such information remains largely left to companies’ discretion. The result: Sustainability information remains consigned to PDF files, with no consistent format and no way to extract data efficiently, compounding work for companies that have multiple reporting obligations and delaying the availability of financially relevant information for financial markets.

Adoption of XBRL for sustainability reporting would mark a critical evolution in global sustainability norms. Adoption would also allow investors to extract material financial information from sustainability disclosures 10 times faster, on average, and at a fraction of the cost of using artificial intelligence to pull unstructured data from PDF files, according to an analysis by the MSCI Sustainability Institute that examined data from XBRL-based sustainability reporting in India.

Though AI shows promise in its ability to read and extract unstructured data from documents, the speed and accuracy with which it can do so lags in comparison with digital formats such as XBRL, which allows users to process and share their data efficiently by describing it in a structured way. To date, however, India, which has mandated use of XBRL for sustainability reporting, and South Africa, which allows companies to file sustainability disclosures in XBRL voluntarily, remain the only two countries that have implemented the use of machine-readable data for sustainability reporting.[1]

Below we map the digital disclosure landscape for sustainability reporting and highlight how regulators and other stakeholders can encourage a digital-first approach.

The use of structured data for financial reporting has become mainstream across global financial centers since the establishment of XBRL for financial reporting in 2000.[2] The U.S., China, the European Union, the U.K., India, Japan, Singapore and South Korea have all instituted XBRL-based financial reporting systems.[3] Taken together, companies representing 84% of global market value reported their data in XBRL, as of December 2024.[4]

Detailed tagging of financial data enables investors to synthesize corporate disclosures rapidly and consistently.[5] Think of XBRL as akin to putting a barcode on each piece of financial data. In a PDF, the information “Revenue: 1,000,000” might appear as simple text and numbers. These are easy for human readers to understand, but there is nothing to flag their meaning for software. In an XBRL report, the 1,000,000 figure is given a machine-readable digital tag that links it with a precise, clearly defined concept (in this example revenue) and enables comparison with equivalent data. Importantly, the tag also carries crucial metadata, such as currency and time period, as well as the information’s relationship with other facts.

Once companies tag data in XBRL it can flow automatically into a range of reports, including sustainability disclosures and annual filings, without the need to reenter the same information in different formats.

Inline XBRL (or iXBRL) is the preferred XBRL format for financial reporting. It presents data in both machine- and human-readable form in a single document, enabling companies to maintain their unique branding, design and layout, and human readers to view the original report as created by the preparer, while also providing embedded XBRL tags that computers can recognize.[6]

Regulators require use of XBRL for a wide range of reports. The U.S. Securities and Exchange Commission, for example, requires the use of XBRL for company financial statements.[7] Companies in the U.K. must file both their tax returns and annual reports in XBRL format.[8] The XBRL-based European Single Electronic Format is the mandatory reporting format for annual financial reports from companies in EU-regulated markets.[9] Listed companies in China, which in 2004 became the first country to require XBRL for securities filings by public companies, are required to file financial statements in the digital format.[10]

The use of structured data holds similar advantages for sustainability reporting. Not only does the use of data standards such as XBRL save companies time and money, but disclosure in digital formats enables sustainability-related financial information to reach the market in a fraction of the time it otherwise would, improving the ability of investors to assess what companies are worth, manage material risks and allocate capital accordingly.

The case for digital-first disclosure is gaining traction amid the global push for disclosure of sustainability-related financial information. Experience from countries such as India and South Africa highlight the value of a digital-first mindset, even while disclosure standards themselves are still in development.

Experience further suggests that starting with structured data at the outset of sustainability reporting and expanding its scope over time has succeeded in encouraging its adoption. Incorporating feedback from companies and other stakeholders on a regular basis has helped to broaden support. Regulators, companies, securities exchanges and investors each have a role to play.

While every country will find its own path based on local circumstances, early examples in emerging markets suggest that investing in digital infrastructure from the outset can help avoid costly retrofits later.

Digital reporting of sustainability-related information via XBRL can accelerate the availability of such information for investors, policymakers and other stakeholders across capital markets, while streamlining reporting for companies. The use of XBRL for global financial reporting has demonstrated the value of digital tagging in enabling users to synthesize disclosures consistently and at a fraction of the speed of pulling unstructured data from PDF files. Its application in combination with AI holds the potential to advance sustainability reporting even further.

Early adopters like India show that it is possible to build a new architecture for transparency. By learning from such efforts, stakeholders across the map can use structured data to create a foundation for effective reporting and, by doing so, maximize the value of sustainability disclosure for investment decision-making.

The authors thank the following colleagues for their contributions to this post.

XBRL International – Eloise Phipps and Revathy Ramanan
MSCI – Abhay Tiwari, Satish Shinde, Rumi Mahmood, Lauren Yeung, Brian Browdie, Simone Ruiz-Vergote, Radhika Biwalkar and Daniel Cremin.