By Laura Kelly
With the convergence of so many sustainability reporting demands – from TCFD and ISSB to EU CSRD and SEC climate disclosures – many organisations are starting to recognise the challenge is far more than a standalone compliance exercise.
“When organisations realise the depth of data and information that is going to be reported and what that will show stakeholders, investors and customers, the need for wider reporting-led transformation becomes clear.“
That’s because these new sustainability reporting disclosures don’t just exist in a regulatory vacuum. Your organisation is likely to have made corresponding pledges in areas such as diversity, inclusion and transition to net zero. From sourcing and production to where and how you invest, these all-encompassing disclosures touch every part of your business and will cast a comparable and auditable ‘investor grade’ public spotlight on whether you’re living up to your promises.
If not, you face a damaging credibility gap and potentially higher cost of capital when seeking to secure investment. The risk of being called out for ‘greenwashing’ is highlighted in our latest UK Investor Survey. More than 90% of respondents believe that corporate sustainability reporting contains at least some level of unsupported claims.
Accelerating transformation
“Sustainability reporting can be a powerful catalyst for accelerating more fundamental business transformation, creating trust and unlocking new sources of value and sustainable growth.“
By looking at sustainability reporting as a strategic rather than just compliance issue, you can identify early on the gaps where you are falling short of targets, set a clear road map for change and take control of your story. Failing to do so, however, risks having to make embarrassing and potentially reputationally damaging climb downs on publicly made sustainability pledges or be labelled as greenwashing.
Get it right, on the other hand, and this reporting-led cross-functional transformation can be a win-win. It can uncover new ways to reduce emissions and cost, spark innovation and open up access to new markets and sustainable finance.
From ambition to action
So how can you turn these new reporting demands into an opportunity to create value and build trust? Three priorities stand out:
Reporting-led transformation must be led from the top
Our UK CEO Survey lays clear the transformation imperative key to growth and long term viability, with 53% of UK CEOs taking personal responsibility for driving critical change and sponsoring transformation within their organisation. To be successful, this transformation can’t be done by the different business functions each going off and doing their own thing. It needs to be sponsored by the CEO and owned across the boardroom, particularly by the CSO and CFO.
Embrace the difficult conversations
From shutting down carbon-intensive operations to who you do business with and where, moving from ambition to action on sustainability and net zero requires difficult conversations and decisions. With your business about to come under the spotlight like never before, it's time to take control of the agenda and make the tough calls.
Many of the quick compliance wins around reducing scope 1 and scope 2 emissions and switching to renewable energy have been done already by organisations leading the way. The bigger challenge - and opportunity - lies with the next steps around scope 3 emissions and the supply chain. Are you willing to co-invest with your supply chain and collaborate with your competitors to drive meaningful change?
Articulate the business case
Throughout the transition, it’s important to articulate the benefits for the business and bring operational teams on board. For example, reduced packaging can not only help meet environmental targets, but also reduce costs and attract new customers.
Next steps
With the pressure of looming regulatory deadlines it’s understandable that many organisations are asking “how can we comply in the fastest, simplest way?”. Get in touch to find out how we can help you go beyond compliance and set out a roadmap to reporting-led transformation that turns your ESG ambitions into action.
