Why your corporate sustainability reporting efforts can’t wait
At a glance
Regardless of industry and location, your organisation is very likely navigating the complex, evolving space of sustainability reporting and disclosure. GHD Advisory research tells us that 62 percent of the 550 executives surveyed are setting the bare minimum in sustainability targets to align with regulatory guidelines. Outside of compliance and regulation purposes, demonstrating action on responsible and sustainable practices signals leadership, strategy strength and competitive advantage. This article offers insight on where to place effort and resources in a developing reporting and regulation landscape.
Building transparency and accountability into how organisations report and measure sustainable action is increasingly important, yet remains complex. More recently, climate disclosure is front and centre, with international and state jurisdictions increasingly calling for a unified, comparable, reliable greenhouse gas (GHG) inventories, evidence of broader ESG data management and assured policies. Waiting for regulations to be handed down may be too late. Embedding sustainability reporting capabilities cannot wait. For most organisations, it is a massive undertaking. Data collection and verification, stakeholder engagement, driving internal collaboration and getting ready for non-financial assurance takes time. Delaying efforts risks being adequately prepared to respond and non-compliant.
More stringent reporting governance is in effect
Around the world new ESG regulations are mandating disclosures in alignment to reporting frameworks and standards. Regulations are becoming more standardised and simplified through pilot testing and real-world learnings. This means you need to stay across announcements and impending timelines to ensure you can provide what’s expected. Creating and implementing governance structures is critical and not just a one-off process, but rather part of a long-term strategy requiring ongoing measurement, benchmarking and reporting.
Prioritise your sustainability reporting efforts across three areas:
1. Decarbonisation and sustainability strategy
Take a step back to connect sustainability-related goals with business strategy and objectives, with a view to integrating sustainability across decisions, processes, and risk management. Building a GHG inventory across Scopes 1,2 and 3, identifying climate risks and the necessary governance to drive sustainability reporting into corporate decision making will remain part of the regulation reality.
Materiality assessments and action planning can take months to complete, so this needs to be factored into your resourcing and effort. Take the time to identify the critical ESG factors to your organisation to guide and prioritise accordingly. You can still move ahead with identifying key issues and analysing their commercial value/impact without the official financial materiality thresholds while we await further regulation guidance.
2. Climate risks
Identify, evaluate and mitigate physical and transition risks linked with climate change that could impact your organisation. The level of detail and effort required should be seen as a phased approach and will require a varying level of effort; depending on where you are on your sustainability journey. And this is where innovative digital technologies and solutions are proving to be timesaving and valuable.
To tackle and understand climate risk, resilience integration in strategy and business models, it is recommended to leverage cross-company stakeholder teams from across business units. Material climate-related risks and opportunities should also be connected to the organisation’s risk management processes, ensuring that strategic responses are also integrated into corporate strategy. Aligning the climate risks to business impact, risks and opportunities will require availability of high-quality data and reliable analysis of climate, patterns and projections with understanding on how these elements will impact operations, partners, customers, supply chain, employees and your bottom line.
3. Data accuracy in reporting
The best possible outcome is one that is founded upon robust data that demonstrates the management of sustainability-related risks and opportunities and stands up to audits and scrutiny. Lastly, you must be able to illustrate governance of sustainability and ESG issues and impacts, both from and on, stakeholders to minimise exposure to greenwashing risks.
Start the corporate sustainability reporting process.
GHD Advisory guidance
- Start your corporate sustainability reporting journey now. Waiting for mandates could leave you scrambling to comply. Ensure you factor in budget, resources and time to complete what’s required.
- Build stakeholder trust by gaining consensus right through the entire organisation – from operations up to the c-suite and back again, and engage with your supply chain.
- Your reporting and disclosure journey is about more than compliance – it offers your organisation with an opportunity to drive business efficiencies, foster collaboration and strengthen resilience.
Learn more about how GHD Advisory’s ESG and strategic sustainability can help deliver your targets and plans.
Download the GHD Sustainability Monitor 2024 to uncover the global state of corporate sustainability and uncover how to expedite meaningful action.