Company leaders must put sustainability reporting first
Dr Richard Maggs, Head of Environment & Sustainabliity, Bureau Veritas explores the evolution in corporate sustainability reporting and why integration is key to stopping it becoming a tick-box exercise.
In recent years, the future health of our planet has risen to first place on the agenda, with a consensus that it is now critical that businesses must behave more sustainably.
Simply put, this means that investors, consumers, suppliers, and others expect businesses to focus on the long term and not to make the solutions of today the problems of tomorrow. Instead, to take a holistic approach to managing operations, being mindful not only of commercial implications, but also of the potential effect on their stakeholders, today and over time.
The importance of reporting
As a result, sustainability or Environmental, Social and Governance (ESG) reporting has moved to the forefront as part of this wider focus on transparency and trust – and organisations have no time to lose.
In Europe, SMEs will have to report on Corporate Sustainability Reporting Directive (CSRD) requirements in 2027 (2026 data) meaning that time is now of the essence.
Having recently conducted a worldwide study of senior leaders, entitled “sustainability reporting – what leaders need to know” involving more than 1,000 respondents across 101 countries, Bureau Veritas has found that an overwhelming majority of senior leaders are acutely aware of the need for more sustainability and ESG reporting, yet this isn’t being translated into robust action.
We now know that two-thirds of global companies that don’t currently publish a report, are deterred by a lack of time and resources needed to effectively meet sustainability disclosure requirements.
And for the 34% of companies that do already report – over half of them – have more than 1,000 employees, often with dedicated corporate social responsibility (CSR) teams, with just 10% relying on senior management to lead sustainability initiatives.
Clearly, the biggest takeaways and challenges from the report are that of time and knowledge. An overwhelming majority of respondents said that to improve sustainability performance reporting, accuracy, relevance, completeness and consistency of recorded information will be the main driver – and having a dedicated senior person to manage the entire process.
The evolution of reporting
Metrics and narrative that sit outside of financials need to be included and based on verified CSDR data. However, it should also tell an engaging story about the company to a wide audience beyond just investors – and that’s the sort of knowledge that needs to be filtered from the top down.
We are now at a critical point in the evolution of corporate sustainability reporting and encourage more executive leaders and board members to demonstrate personal leadership and accountability on this topic to communicate effectively and in a common language that all stakeholders understand.
CSRD is here to stay and that’s why sustainability disclosure needs to be easily understandable, and describes company performance holistically yet with sufficient transparency to be able to send the right market signals.
If organisations miss the opportunity to achieve global alignment in reporting, resulting in corporate reports that don’t meet the needs of the market, collective efforts will be abandoned – the consequences of which could result in penalties.
By integrating sustainability reporting into a Board’s management of risk and opportunities, trends and topics can be assessed to begin to build greater knowledge and understand sustainability challenges.
Clearly, by undertaking this research, we have found that yes, there is a long way to go for companies and yes there is an appetite for change.
In preparation for upcoming requirements, an excellent place to start is to ensure that any report prepared is verified by a credible, trusted and independent third party, to accurately prove that sustainability performance data is accurate and unbiased. BV is a good starting point for giving that much-needed, more holistic picture of corporate performance.
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