Is corporate sustainability reporting governed by GAAP?

The correct choice emphasizes that corporate sustainability reporting is not governed by Generally Accepted Accounting Principles (GAAP). GAAP primarily applies to the financial statements that companies prepare for external reporting, ensuring consistency and comparability in how financial information is presented.

Sustainability reporting, on the other hand, focuses on a company's environmental, social, and governance (ESG) performance and is not mandated under GAAP. While some companies may choose to follow specific sustainability frameworks or guidelines, there is no universal requirement to adhere to GAAP standards in their sustainability reports. Therefore, the notion that corporate sustainability reporting is governed by GAAP is inaccurate, reaffirming that it operates in a separate framework that provides flexibility and allows firms to report on their sustainability efforts in various ways.