‘Legislation lethargy’: Sustainability professionals struggling with tougher reporting requirements, survey finds

Conducted by facilities management giant Mitie last month, with the results published this week, the survey took in 500 decision-makers from organisations in a range of industries.

Fewer than one in five said that they believe existing approaches to corporate sustainability reporting are effective.

The survey found that a proliferation of different mandatory and voluntary disclosure schemes has left a significant minority (38%) lacking clarity about which information they need to report, and in which formats.

Around half of those polled said their team is reporting in line with three or more different frameworks tailored around environmental, social and governance (ESG) topics. Some firms were seeking to align with eight.

Many of these frameworks are mandatory, like the UK’s Streamlined Energy and Carbon Reporting (SECR) and Energy Savings Opportunity Scheme (ESOS).

But most businesses also follow at least one voluntary framework, potentially due to believing that they could be mandated in the comping years.

A key example are the first two standards from the International Sustainability Standards Board (ISSB). Launched last summer, these standards already have the backing of numerous national governments including the UK, Canada, Japan and Brazil.

International standards and the shift to mandates is widely regarded as important to equip investors with the comparable, accurate, detailed information they need to manage risk and reduce the environmental impact of their portfolios.

Yet sustainability teams do face challenges collecting and providing this information due to challenges such as time constraints. Three in ten of those polled by Mitie feel they are not equipped to comply as legislation becomes stricter. Six in ten worry that their company could either be penalized or face reputational damage from non-compliance.

Mitie’s head of data science and energy markets Catherine Wheatley said: “Reporting requirements have intensified in recent years and the legislation labyrinth is here to stay. For sustainability leaders this means grappling with multiple reporting frameworks, stricter multi-jurisdictional regulation, and the intense scrutiny of stakeholders who expect to see reduction targets and their progress in the public domain.”

“The upside is that from the work that goes into meeting stringent reporting requirements, we can gain a wealth of actionable knowledge that can supercharge a sustainability strategy.”

Earlier this month, EU member states finally reached an agreement on progressing the Corporate Sustainability Due Diligence Directive (CSDDD) – a landmark new law that will require businesses to take more responsibility for labour and human rights violations in their supply chains.

The Directive’s scope was significantly narrowed in an attempt to get it over the line. Critics argued that businesses, especially SMEs, should not face new burdens at this economically challenging time.