Why your corporate sustainability reporting efforts can’t wait

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.

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.

In June 2023, the International Sustainability Standards Boards issued their global guidelines for disclosing on climate and sustainability impact, with guidance impending around performance management, materiality and assurance. Soon after, the California Senate Bill was announced, outlining requirements related to new GHG reporting requirements which will affect vast numbers of companies with revenues greater than USD1 billion who do business in California.

Additionally, last year, the Corporate Sustainability Reporting Directive launched, again, affecting thousands of entities within and outside of the EU, with sector-specific guidance expected in 2026.

In the United States of America, the long-awaited final version of the Securities Exchange Commission climate change disclosure guidelines has been released. Wide scale redacting or back-pedaling is not expected and making efforts to prepare based off the recently published landmark California climate disclosure mandates will put you on the front foot.

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.

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.

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 your corporate sustainability reporting journey now. Waiting until mandates and guidelines are passed down 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.

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