We have seen a significant shift in the sustainability reporting landscape over recent years.
Still a relatively new industry, it is not surprising that a high degree of fragmentation exists. With changing legislations, new technologies and stakeholder demands evolving rapidly, organisations will need to stay one step ahead of the latest developments.
Our ESG Base research team have identified the top four trends you should expect to see in the coming years:
1. An increase in mandatory reporting requirements
Today, most corporate sustainability disclosures are voluntary, largely driven by market forces. However, there is a clear legislative trend across markets to move toward mandatory reporting. Many are looking for greater transparency to address greenwashing and impact washing.
European governments have already set out their mandatory ESG reporting parameters. This trend is now also emerging in both US and Asian markets.
2. Move towards a convergence of standards and reporting frameworks
Recently there have been moves from ESG reporting organizations towards consolidation of the multiple frameworks currently in use.
In the second half of 2020, five of the largest sustainability reporting and framework organisations (GRI, CDSB, SASB, IIRC, CDP) announced their intent to collaborate toward achieving a single comprehensive reporting standard/framework. SASB and IIRC went further with the announcement of a merger.
In response to demand for its involvement in development of the global sustainability standards, the International Financial Reporting Standards’ (IFRS) has committed to putting together a definitive proposal by September 2021, and establish a Sustainability Standards Board (SSB) at COP26.
All of this activity signals the industry is moving towards a more holistic reporting framework from 2022.
3. Communicating ESG to stakeholders and investors
While standardised reporting and metrics allow for comparison, every organisation operates in a unique context, and stakeholders’ information demands differ. While we see a move in the short-term towards sustainability reporting becoming the standard vehicle for stakeholder ESG communications, in the medium and longer-term their information demands will be for greater tailoring and contextualising, available in real-time and via multiple channels.
4. Greater accuracy and transparency require more sophisticated digital tools
Increased ESG reporting will no doubt result in greater scrutiny of a company’s information. Inaccurate and misleading claims are likely to lead to dissatisfied stakeholders and even the possibility of legal action. As a result, companies will need to turn to more sophisticated and advanced digital tools for help in their record keeping and data aggregation.
ESG Base predicts that tools such as cloud-based data vaults that maintain log-of-data-trails, and AI-based programs which identify outliers during data entry and reporting, will become more mainstream for reporting activities.
Future-proof your reporting capabilities
To help you navigate the world of sustainability reporting, ESG Base have developed cloud-based digital capabilities which address future market needs and help to facilitate stakeholder engagement.
Get in touch with us to find out more about our ESG Base reporting platform capabilities.
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