Which type of sustainability disclosure guidance is characterized by a comply-or-explain approach?

The comply-or-explain approach is a key characteristic of specific sustainability disclosure frameworks that allow organizations flexibility in how they communicate their sustainability practices. This approach requires companies to either comply with a set of established disclosures or, if they choose not to comply, to provide an explanation for their decision. This flexibility encourages more meaningful transparency, as companies that may not fully align with every prescribed standard can still show accountability by explaining their unique circumstances or methodologies.

This method is particularly beneficial in the context of sustainability, as it accommodates the varying degrees of maturity across different sectors and organizations in their sustainability journeys. By adopting a comply-or-explain framework, stakeholders can gain insight into a company's commitment and its rationale, leading to more informed decision-making. It fosters dialogue around sustainability practices by placing emphasis on the reasons behind different approaches rather than imposing a one-size-fits-all standard, which may not adequately represent a company's specific situation or goals. This makes it effective in promoting sustainability accountability while acknowledging the diversity in corporate practices.