Reporting and Communications Archives - Simply Sustainable

Simply Sustainable

If we communicate the vision behind our ideas, the purpose guiding our products, people will flock to us. Adam M. Grant Best-selling author and Organisation Psychology Professor

Telling your sustainability story

Interest in sustainability has grown significantly in recent years, with more and more stakeholders wanting to understand what organisations are doing on ESG matters. However, many miss the mark in effectively communicating their sustainability efforts and fail to realise the opportunity to engage more stakeholders in their journey. Now is the time to capitalise on sustainability and showcase the efforts being made to make the world a better place.

The appetite is there amongst stakeholders: 57% of consumers say that a company’s approach to sustainability influences their perception of the brand.[1] It also influences employees, according to IBM’s Institute for Business Value (IBV) study, with 68% of respondents saying they are more willing to accept roles where they can directly influence sustainable outcomes.[2]

Financial markets are very much tuned in, too; in non-US markets, sustainable investment assets under management (AUM) have increased by 20% since 2020;[3] Bloomberg predicts that ESG assets will exceed $53 trillion globally by 2025, representing more than a third of the projected $140 trillion of total assets currently managed globally.[4]

The issue is that companies need to develop an engaging narrative that will motivate consumers, employees, investors, and other stakeholders to purchase from, invest in, partner with, and work for.

But the question is, how do you draw them in, and what do you put in that shop window to showcase your sustainability efforts while balancing the risk of greenwashing?

The communication challenge

Many organisations need help to tie an approach to sustainability to a brand identity and, fundamentally, what it wants to achieve on ESG matters. It is very easy to misconstrue what an organisation stands for on ESG due to the long list of initiatives which companies typically disclose in sustainability reports. Whilst materiality assessments can help show the importance of prioritisation for specific topics, there is still a disconnect on what companies want to achieve on ESG matters.

For some, this is clearer than others, and many companies begin by developing, implementing and communicating a sustainability strategy. Whilst this is an essential first step, the communication challenge remains; as a skeletal structure, an ESG strategy can tell your stakeholders ‘what’ you are going to do but doesn’t necessarily explain ‘why’ you’re doing it. As a result, it is very common for companies to experience a disconnect among stakeholders in terms of their sustainability strategy and targets.  Ultimately, companies must engage stakeholders with their ‘why’.

Work out why

Whether it’s on your strategy holistically or on individual strategic pillars, a strong ‘why’ can go a long way, but getting it right is the challenge. To be trustworthy and credible, organisations should focus on its true intended impact, how this links to the corporate purpose and, crucially, the real and honest challenges being faced. Being open and transparent can help develop a strong and clear ‘why’, which will help stakeholders build trust and confidence in your brand.

Trust and confidence are two terms which are becoming harder and harder to come by. The 2024 Edelman Trust Barometer established that an increasing number of people believe establishment leaders, government and business leaders, are purposely trying to mislead people, but, at the same time, businesses are the most important actors in delivering change.[5] According to the report, strong leadership is needed for society to accept these new technologies, with businesses needing to partner for change in order to restore trust in society.

This opens the door for companies to take a stronger stance on matters which matter most to them. Communicating the why can win over stakeholders on why focusing attention on its priorities is the right thing for the organisation. However, it is important not to overstate or exaggerate your desired impact, as this can culminate in greenwashing and false claims (more on this below). Taking a more assertive stance on the issues that matter most doesn’t mean being untruthful; it is about having values, being transparent, making commitments and being accountable.

How to drive the message home

After you have established your approach to sustainability and the strength of your ‘why’, the final piece of the puzzle is to back it up with tangible action; while the ‘why’ helps with obtaining stakeholder buy-in, people want to see results that support the initial ambition. This comes in the form of roadmaps, action plans and, finally, performance communications.

With stakeholders wanting to know more about sustainability performance, an increasing number of organisations are engaging in sustainability reporting across the globe. In 2023, it was reported that 85% of FTSE 250 companies and 98% of large-cap companies in the S&P 500 published sustainability reports, representing an all-time high.[6]

The disclosure dilemma

Due to the historically unregulated nature of sustainability communications and performance, many companies have exaggerated and overstated the impact of their performance, products and services on society and the environment.

From September 2022 to September 2023, it was reported that approximately 25% of climate-related ESG risk incidents were attributed to greenwashing and 31% of publicly listed companies linked to greenwashing were also linked to social washing, where companies overstate their impact on social issues.[7]

Frameworks like the Green Claims Code and the European Green Claims Directive exist to hold companies accountable for the claims that they make, specifically on the environmental benefits of products and services. Should companies be found in breach of these, they can face significant financial penalties as well as reputational damage. Many companies, including well-known brands such as Ryanair, Hyundai, Innocent, Oatly, Asos, and Boohoo, have already been investigated by the relevant authorities for the claims made. Whereas some claims were inflated, misleading and false, others merely lacked the specificity and details to back up claims made, leaving them exposed to misinterpretation.

Over time, more jurisdictions will continue to implement measures that assess claims made on actual ESG performance, and the risk of companies being exposed to this practice will continue to rise. Truth and transparency have now become the driving force behind regulations related to sustainability communications. This is also the case with regulations like the EU Corporate Sustainability Reporting Directive and the IFRS Sustainability Disclosure Standards, which now look for accurate disclosure on large companies’ non-financial reporting. Greenwashing is now a material risk to most businesses, fuelled by poisonous distrust from stakeholders, let down by unsubstantiated claims. The antidote to this distrust is not to go quiet but to firmly focus on honest, transparent and comparable communications.

Valuing the benefit of clear communication

With the focus now on transparent and accurate disclosures, the question now begs, can companies even shout about their ESG performance and develop engaging narratives without negative backlash?

In short, yes.

Values matter. Companies should be encouraged to take a stance on the issues they believe in and be proud to communicate the work it has done to improve environmental and social standards. Not only that, people want to see how companies are progressing against their targets, demonstrating that they are committed to their ‘why’. This can be achieved without making exaggerated and misleading claims, which can create a false perception of the true impact of the organisation.

Sustainability is a journey. No organisation is fully sustainable, and stakeholders recognise that. Truth and transparency on performance help build trust among stakeholders, and whilst some may see this as a weakness, it is a show of strength to accept errors or issues which arise. So long as you have a plan to rectify poor performance and you continue to remain committed to your ‘why’, stakeholders appreciate honesty and humanity over exaggerated positivity.

It is essential to be aware of the risks associated with greenwashing and misleading claims. However, that should not deter you from taking solid stances on sustainability and communicating as such. Stakeholders want to know that their decisions align with their values, and they want to be part of a positive solution. Truthful and transparent communications don’t have to be boring; they can be engaging, personal, and fun. As Adam M. Grant says,

“If we communicate the vision behind our ideas, the purpose guiding our products, people will flock to us”.

So, inspire them, tell them what you’re going to do, why you’re doing it and how you will achieve it. It will have a bigger impact than you expect.

For more information on how Simply Sustainable can help with your communications strategy, please get in touch with one of our friendly experts here.

Author: Cameron Wilson, Consultant, Simply Sustainable

[1] Boston Consulting Group, ‘Winning the Consumer with Sustainability’, June 2022.
[2] ESG Today, IBM Survey: Employees More Likely to Accept Jobs from Sustainable Companies, August 2022.
[3] Global Sustainable Investment Alliance, Global Sustainable Investment Review 2022, November 2023.
[4] Nasdaq, ‘What is ESG investing and why is it worth trillions?’, July 2021.
[5] Edelman Trust Institute, 2024 Edelman Trust Barometer.
[6] Governance & Accountability Institute, New Research Shows Mid-Cap U.S. Public Companies Closing Sustainability Reporting Gap in 2022.
[7] BusinessWire, RepRisk data shows increase in greenwashing with one in three greenwashing public companies also linked to social washing.

2024 signalled a significant step-change in global sustainability reporting. With the EU’s Corporate Sustainability Reporting Directive (CSRD) coming into force[1], alongside the announcement of new sustainability standards by the IFRS[2]. Taking a more strategic approach to disclosures has escalated up the agenda of C-suite leaders and board conversations. Aligning corporate disclosures to the new standards has added a layer of complexity to how companies should approach reporting, meaning a well-thought-out sustainability disclosure strategy is key to navigating the current landscape and building trust among stakeholders.

While the IFRS S1 and S2 standards remain voluntary for now, many jurisdictions have committed to adopting these into mandatory non-financial reporting, including the UK, which will announce updates to the upcoming Sustainable Disclosure Standards (SDS) summer 2024[3]. Alongside CSRD, these standards demand a more mature approach to reporting than the traditional collection of environmental, social and governance (ESG) data and annual reporting.

The standards are primarily aimed at financial markets, striving to drive transparency and comparability through a global base of non-financial information disclosed by issuers that will inform better capital allocation decisions.

The goal is to facilitate the elimination of greenwashing[4], social washing[5], and unrealistic long-term target setting. This is not only essential to solving the climate crisis but also reducing investment risks in businesses that are not prepared to adapt to the impacts of climate change and its associated social impacts.

For issuers, this will require businesses to become far more strategic about how they approach reporting.

Collectively these standards require disclosures to be aligned to material topics, identified through a double materiality assessment; the communication of how companies are currently mitigating sustainability-related risks and potentially, as is the case for CSRD; the disclosure of over 1000 new data points. Failure to align with these standards not only risks non-compliance but also the credibility of the organisation and the trust of capital markets.

These regulations encourage companies to integrate sustainability across every function. Ultimately, this will likely drive better sustainability performance and, in turn, long-term financial resilience to climate change. However, presenting a truly integrated business, where sustainability is at the heart of operations will require a different tactic from the one-stop-shop sustainability report approach. Not only do these standards require a significantly larger data set, but they also mandate a risk management-focused approach that involves the engagement of all senior leaders. Engaging legal teams to ensure ESG is included in compliance scans will also support a long-term view.

The good news is that CSRD and IFRS Sustainability Standards bring together many of the most common ESG frameworks, including GRI, TCFD, SASB and CDP, meaning that businesses with a history of reporting against these standards should be well prepared. However, with tight timelines and more standards on the horizon, most companies can’t afford to wait until year end to begin preparing sustainability disclosures. The methodology requirements mean that companies should be acting now. Focusing on sustainability-related risks and opportunities and aligning actions, disclosures, and strategies to mitigate material risks and realise opportunities.  and aligning actions, disclosures, and strategies to mitigate material risks and realise opportunities.

Here are some top tips for taking a more strategic approach to reporting:

  1. Perform a mid-term horizon scan: understanding what is coming for your business is an essential first step. Undertaking a 2–4-year horizon scan will provide a clear picture of the scale of strategic planning and action required.
  2. Aim to drive business resilience, not compliance: Compliance with regulations does not drive investment or improve corporate reputation. Maximise the value of frameworks and standards with the aim of improving business performance and reputation, and compliance will naturally be achieved.
  3. Look into the crystal ball: The direction of travel has been quite clear: where there is a non-financial risk, expect regulation. Attending conferences and webinars will give you a clear idea of the future of global regulations.
  4. Aim to give your stakeholders the information they need: As the sustainability reporting landscape matures, the volume of information to be reported grows. Many companies are shifting their methodology away from producing a single annual ESG report to adopt more targeted stakeholder communications on sustainability matters. From fact sheets to microsites, a more strategic approach to communications that considers what information is needed and how best to share it, will provide the right information to the right groups. This approach also gives businesses the headspace to produce more attractive and impactful sustainability narratives that inspire and engage a range of stakeholders.
  5. Engage and share: Taking a strategic, long-term approach will build trust and credibility with stakeholders, particularly capital markets, who recognise that the speed at which regulations are evolving puts investments and assets at risk. Companies that communicate a more measured, mature approach to disclosures will ease investor concerns.
  6. Keep a global outlook: As regulations are adopted by new jurisdictions, compliance may become complex, particularly for multinationals. However, adopting interoperable standards, such as CSRD or IFRS, and ensuring the full geographic scope of the business is included, will likely support an easy transition to upcoming new global standards.

Over time, businesses that adopt a more measured approach to sustainability reporting will create long-term value, trust, and credibility with a diverse range of stakeholders. It will facilitate the inclusion of the whole business, facilitating the transition to a more integrated business where sustainability is a core part of operations. The value of creating a strategy for sustainability disclosures and reporting is intrinsic to the long-term success of businesses. Embracing sustainability is no longer optional; it is a strategic imperative.

Author: Ed Packshaw, Head of Reporting and Communications, Simply Sustainable

For more information on how Simply Sustainable can help with your disclosures strategy, please get in touch with one of our friendly experts here.

[1] https://finance.ec.europa.eu/news/commission-adopts-european-sustainability-reporting-standards-2023-07-31_en
[2] https://www.ifrs.org/news-and-events/news/2023/06/issb-issues-ifrs-s1-ifrs-s2/
[3] https://www.gov.uk/guidance/uk-sustainability-disclosure-standards
[4] https://www.edie.net/greenwashing-hydra-new-report-warns-of-six-types-of-greenwashing-from-corporates/
[5] https://www.morningstar.co.uk/uk/news/226070/youve-heard-of-greenwashing-now-meet-social-washing.aspx

 

On 5 January 2023, the Corporate Sustainability Reporting Directive (CSRD) came into force. The CSRD aims to establish a common reporting framework in order to make reliable and structured sustainability information public and to bring sustainability reporting on par with financial reporting.

Our Netherlands Country Manager, Sytze Dijkstra, and 4 other sustainability professionals share their opinions and views on their CSRD experience and what’s required of businesses

Complete the form below to download the full Insight.

Working with our clients, we have seen the complexity and pitfalls of implementing CSRD reporting close-ups. Much depends on the business context, but three common challenges stand out: finding the appropriate level of granularity, creating a robust reporting process and engaging the organisation. Sytze Dijkstra Netherlands Country Manager

CSRD preparation: Sharing lessons learnt

2023 marked another record year for CDP as more than 23,000 listed companies worldwide, representing over 66% of global market capitalisation, disclosed through CDP. This is a 24% increase compared to 2022.1

As mandatory disclosure expands, the 2024 CDP questionnaire will align with the ISSB’s climate disclosure standard (IFRS S2) to provide a harmonised platform to allow investors to access comprehensive data across regulatory requirements, which is comparable across companies and regions.

An alignment with the TNFD framework will also start to be reflected in the 2024 questionnaire, encouraging companies to report on nature by providing a robust set of good practice indicators on areas such as freshwater, oceans, and land.2

CDP scores range from a D to A, taking companies on a journey starting from disclosure (D) to awareness (C), management (B) and finally to leadership (A). Companies that score an A demonstrate best practice in strategy and action as recognised by CDP’s aligned framework. They will have also undertaken actions such as setting science-based targets, creating a climate transition plan, developing water-related risk assessment strategies, and/or reporting on deforestation impact for all relevant operations, supply chains and commodities.3

Even at different stages of a company’s environmental journey, disclosing through CDP can offer significant benefits. It cultivates trust by promoting transparency and enhancing reputation. It can boost competitive advantage, track and benchmark performance against industry peers and uncover risks and opportunities, thereby informing data-driven strategies.4

The 2024 CDP cycle

CDP’s new platform will be available from April 2024, with the response window from early June 2024 to September 2024.

The questionnaire will be integrated across all three themes (climate change, forests, and water) to be more efficient and user-friendly, while still enabling companies to receive a separate score for each theme.

Key takeaways

  1. Prepare early.

Begin planning for the next CDP cycle as early as possible, taking into consideration any gaps identified and lessons learnt from the previous year and reviewing questionnaires and guidance materials in advance.

  1. Provide company-specific information.

Tailoring responses to reflect the company’s unique circumstances by providing case studies and references specific to activities, services, and operating locations gives investors’ confidence that the issue has been thoroughly considered.5

  1. Demonstrate continuous improvement.

The bar for what qualifies as environmental leadership is raised each year.6 Companies should continually adapt and innovate to meet the ever-rising standards for environmental leadership, which are shaped by emerging science, stakeholder feedback, and the market’s demand for environmental transparency.

Remember, CDP’s alignment with global standards and frameworks ensures that your disclosure efforts contribute to meaningful climate action. With a well-defined climate transition plan, you can show your commitment to achieving a 1.5-degree pathway and manage risks for environmental stewardship and long-term profitability. CDP allows your business to foster a sustainable culture within your organisation and helps you to communicate to stakeholders how your disclosures align with your business objectives.

Good luck with your CDP submission in 2024!

Author: Maria Serrano, Consultant, Simply Sustainable

For more information on how Simply Sustainable can help with your environmental disclosures, please get in touch with one of our friendly experts here.

  1. https://www.cdp.net/en/companies/companies-scores
  2. https://www.cdp.net/en/articles/media/cdp-announces-intention-to-align-with-tnfd-framework-and-drive-implementation-across-global-economy
  3. https://www.cdp.net/en/scores/cdp-scores-explained
  4. https://www.cdp.net/en/companies-discloser
  5. https://guidance.cdp.net/en/guidance
  6. https://www.cdp.net/en/articles/companies/scores-press-release-2023

Over recent years the reporting landscape has evolved in a rapid manner, leading to an explosion of over 600 global reporting standards and frameworks. These reporting frameworks form the basis of global regulations, such as the UK climate-related financial disclosure requirement, the EU CSRD and the US Inflation Reduction Act. This adds an additional layer of complexity, leaving those responsible for non-financial disclosures challenged to balance compliance reporting with the presentation of the business as attractive to investors, employees, customers, supply-chain partners and wider stakeholders. This has created an annual reporting cycle that is challenging, time-consuming and can feel overly complex and duplicitous.

Our thought leadership team evaluate how a new era of sustainability-related disclosures in capital markets worldwide can add simplicity and transparency to your reporting statements.  

Complete the form below to download the full Insight.

Non-financial reporting should be approached with the same rigour as financial reporting, focusing on material risk management, mitigation and strategy. This is what drives trust and credibility in capital markets. Ed Packshaw Head of Reporting and Communications
Wind turbines on a cliff near ocean

Investor ready ESG reporting with IFRS sustainability standards

The International Sustainability Standards Board (ISSB) is in the final stages of determining the technical content for the first two Sustainability Standards, set to launch towards the end of June 2023.

Considered a short turnaround in industry terms, these standards will become effective for reporting periods starting on, or after, 1 January 2024, with an expectation that the first corporate reports aligned with these frameworks will be issued in 2025.

Effective preparation for ISSB reporting should begin immediately for businesses looking to get ahead.

The initial disclosure standards will be:

IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information

  • Relevant to corporates globally, across all sectors. Outlined as the “core baseline” of sustainability reporting, which will attempt to unify disclosures on factors such as waste and emissions.
  • The standard will clearly set out how companies can integrate reporting, linking sustainability-related and financial information.
  • In addition, IFRS S1 will outline plans for companies to disclose all material sustainability-related risks and opportunities.

IFRS S2: Climate-related Disclosures

The short period between the release of these standards and their date of implementation is a demonstration of a powerful response to the strong demand from global investors for consistent, comprehensive and transparent information.

Leading up to the release of the ISSB Standards, the ISSB will focus on developing additional guidance and training materials to support the application of IFRS S1 and IFRS S2. They will also introduce programs to aid reporting entities in appropriately and consistently implementing these standards, as market infrastructure and capacity for dealing with both standards are established.

How Simply Sustainable can help?

Effective disclosure and performance reporting are vital to improve your scoring on ESG ratings and in increasing investor confidence. Investors want to understand how ESG fits into the company strategy and how material topics are managed. At the same time, they may expect the business to align its reporting with key disclosure frameworks such as GRI, SASB and TCFD as well as the impending ISSB disclosures.

Whether businesses are only beginning their reporting journey, or looking to expand to more holistic disclosure, GRI and SASB provide excellent foundations to build upon or to continue to attract a diverse range of stakeholders. Over 324 global institutional investors use SASB standards to review standardised and comparable disclosure that informs their investment decision-making.

Simply Sustainable has worked with large companies on their reporting and disclosures for over 13 years.

We ensure that your reporting is geared towards the interests of your investors and that it aligns with key disclosure frameworks so that they have the necessary information to make decisions about your business.

If you would like more information on how we can help you with your reporting and materiality assessments, please contact us or request a call back.

Author: Ed Packshaw, Head of Reporting and Communications

The Carbon Disclosure Project, informally known as CDP, has emerged as a critical global platform, holding the largest environmental database in the world. The platform primarily facilitates transparent reporting and disclosure to drive sustainable practices across industries. With approximately 20,000 organisations disclosing data on climate change, water security and deforestation issues via CDP, 2022 set a new milestone for disclosure – a 38% increase since 2021 – including listed companies worth US$60.8 trillion (half of the global market capitalisation)1.

Over time, the platform has evolved to reflect the most recent climate science and global policy developments. The 2015 Paris Agreement marked a turning point in the global response to climate change, demonstrating that ‘business as usual’ is no longer sufficient.

Objectives

CDP’s primary objective is encouraging organisations and cities to reduce greenhouse gas (GHG) emissions, protect water resources and preserve forests. CDP accomplishes this by offering a solid and standardised platform for organisations to voluntarily report their environmental data annually.

The structure of the CDP climate change questionnaire was redesigned in recent years in response to market needs and trends in corporate climate change reporting. Revisions included an increased emphasis on forward-looking metrics, improved alignment with other reporting frameworks and the integration of sector-specific questions.

Significance in climate change mitigation

CDP promotes transparency and accountability by pushing organisations to measure and report their carbon emissions and climate-related data. This incentivises implementing comprehensive sustainability policies, whilst providing stakeholders with crucial information for informed decision-making. Beyond corporate boundaries, CDP allows investors to assess the climate risks and opportunities associated with their portfolios, ultimately promoting a shift towards greener investments2. This harmonisation will help to optimise reporting and accelerate the generation of decision-useful information.

CDP also aligns with other large initiatives, facilitating benchmarking and amplifying the impact of sustainability strategies, addressing interconnected challenges and leveraging expertise and best practices.

CDP in 2023

Developments in 2023 reflect CDP’s strategic priorities to track organisations’ alignment with a 1.5°C world, which include enhancing disclosure, governance, engagement, emissions accounting, carbon credits and carbon pricing.

Respondents are asked whether their spending and revenue is aligned with sustainable finance taxonomies to add credibility to their commitment to mitigate and adapt to climate change.

In alignment with the International Union for the Conservation of Nature’s (IUCN) Corporate Reporting on Biodiversity Guidelines, respondents are required to report on the approach to maintaining and addressing concerns associated with having activities located in or near biodiversity-sensitive areas.

Respondents are also requested to provide emissions data for subsidiaries, which includes a breakdown of their Scopes 1 and 2. As other regulatory frameworks and standards increase their scrutiny around emissions reporting, organisations are encouraged to consider subsidiary emissions, which can represent a significant gap in terms of unassessed climate risks and opportunities.

Conclusion

CDP has emerged as a vital catalyst in the fight against climate change. CDP is transforming corporate behaviour, empowering organisations to embrace sustainability practices and mitigating the adverse effects of climate change.

For end-to-end support with your CDP submission or other ESG ratings or disclosures, contact us or request a call back.

Author: Maria Serrano, Climate and Carbon Consultant

1 www.cdp.net
2 https://cdn.cdp.net/cdp-production

The European Commission is influencing business behaviour through the Sustainable Finance Agenda. UK and US companies will be affected by the ESG reporting regulations if they have subsidiaries in Europe.   

US companies not only need to prepare themselves for the proposed Securities and Exchange Commission1 (SEC) Environmental, Social and Governance (ESG) reporting disclosures but should also ensure they are readying themselves for the impact of the international ESG reporting requirements such as the Corporate Sustainability Reporting Directive2 (CSRD).

Within the EU, CSRD is expected to impact nearly 50,000 entities. This is far more than are affected under the current EU reporting requirements. CSRD, which entered into force on 5 January 2023, requires all large companies and all listed companies (except listed micro-enterprises) to disclose information on their risks and opportunities arising from social and environmental issues and on the impacts of their activities on people and the environment.

EU subsidiaries of UK and US companies will be expected to provide substantial ESG disclosures, demonstrating the robustness of their ESG strategy, targets, KPIs and progress, as well as the ESG performance of their products/services and value chain.

One of the requirements of CSRD is to complete a double materiality assessment to determine the priority topics for a company’s ESG strategy and reporting. This type of assessment involves stakeholder mapping and engagement, determining the impact of ESG on the organisation and the impact the company has on the ESG topic. In addition, the financial impact of ESG is also considered.

Climate change is a good example of this inside-out approach, where the impact of climate change on the company is assessed, for example flooding and supply chain disruption. The company would also need to consider their contribution to climate change e.g. use of fossil fuels, production of single-use plastic, use of their products and advice provided to clients.

CSRD also imposes mandatory assurance for reported sustainability information. This is likely to be conducted by a company’s financial auditors if they have the correct skills and experience.

The first set of companies under the scope will have to apply the standards in the fiscal year 2024, with reports published in 2025.

Next steps

Given the short timescales, we would recommend conducting a double materiality assessment urgently and, in the meantime, reviewing current ESG strategy, targets and KPIs against CSRD requirements and wider international reporting requirements. We would also recommend reviewing the current system in place to track ESG data and ensure data is being tracked robustly at a subsidiary level.

Author: Nicola Stopps, CEO, Simply Sustainable

  1. Securities and Exchange Commission. sec.gov
  2. Corporate Sustainability Reporting Directive. europa.eu

Simply Sustainable’s Amsterdam office kicked off 2023 with our first sustainability leaders’ roundtable meeting. The lively discussion addressed the sustainability issues that will affect businesses in Europe in 2023. We saw extensive exchange of views and experiences between peers, looking forward to a year of empowerment and change. 

Sustainability Manager is a 360-degree role

The enormous momentum behind sustainability is only expected to build further in 2023. There is an increasing demand on sustainability managers to provide practical solutions. Participants told us that many colleagues – especially those from the younger generation – come to the sustainability manager proactively with ideas (big or small) and then wish to be part of the transition, as well as board members fighting to have a piece of sustainability in their remit. 

This is great news. However, in many organisations, the interest and urgency of sustainability surpasses maturity and capacity. 

This imbalance is most acutely felt by sustainability managers. Theirs is becoming a 360-degree role, in which they are expected to communicate and manage to colleagues upwards, sideways and downwards, and manage stakeholders all around the business. They must work strategically as well as operationally to realise their agenda. All while the scope of their work is broadening, beyond the traditional focus on environmental issues to include social and governance topics.  

Why the CSRD is sexy

The EU Corporate Sustainability Reporting Directive (CSRD) has made it much easier for sustainability managers to engage people in the organisation on sustainability. Timelines for compliance are short, and the bar is high, so many in the company recognise that preparation must start today. 

Participants see that colleagues are looking to them, as the sustainability manager, to translate the complexity of the CSRD into a clear, step-by-step plan for the business.  

We talked about the challenges of involving and empowering internal stakeholders in the short time span for CSRD compliance. Companies run the risk of going down a narrow route to compliance, missing the value that CSRD preparation can have for future-proofing the sustainability strategy. If full focus is on gathering the data for reporting, opportunities to engage in dialogue about the strategic implications of sustainability topics and how they are best addressed may fall by the wayside.  

Sustainability data is management information

Preparation for CSRD accelerates the need for comprehensive and robust measurement. While new regulatory guidelines clarify what should be measured – previously companies had to find this out for themselves – it does not make data collection and validation any easier.  

Many companies have been looking for the best system for capturing and managing sustainability data. Should they choose a new Environmental, Social and Governance (ESG) tool – of which there are increasingly many available? Can the financial reporting system be extended to include sustainability data? Or are there tried and tested Environment, Health and Safety (EHS) systems that are expanding into this space? There are many solutions out there, but companies find it very hard to judge which are robust and trustworthy. 

As a widely experienced sustainability consultancy, it is our view that sustainability data should be management information and not only be used for reporting. This points to an integrated solution, that brings together financial and non-financial data for informed and balanced decision making. There is a huge need, and we are actively watching this fast-moving space to best advise our clients.

Author: Sytze Dijkstra, Netherlands Country Manager, Simply Sustainable

Download Simply Sustainable’s 2023 ESG & Sustainability Trend report for an in-depth analysis of how sustainability will shape the corporate agenda this year.  

If you are interested in receiving our reports or joining a future Sustainability Leaders’ roundtable, please contact us. 

The Importance of Solidarity and Collaboration in the Face of Adversity

The World Economic Forum (WEF) hosted its 53rd Annual Meeting last week from the 16-20 January 2023 in Davos, Switzerland. Cultural, business, political and other leaders of society convened at the conference to discuss actions needed to resolve current global crises, from the cost-of-living crisis to climate change, but also how to prevent the reoccurrence of these issues.

The World Economic Forum Annual Meeting 2023

Founded in 1971 and headquartered in Geneva, the WEF is committed to promoting sustainable development worldwide1. Given the many environmental, social and economic emergencies the world currently faces, this year’s meeting sought to reaffirm the importance of public-private cooperation to address these problems, as well as facilitate positive, long-term systemic change. Consequently, at the heart of the meeting, there was a desire to find ways to reinstitute a collective sense of agency and to turn defensive measures into proactive, vision-driven policies and business strategies. Key heads of state and government, as well as different geopolitical and geoeconomic groups (e.g. the Country Strategy Dialogues), contributed to discussions over the course of the four-day meeting; the WEF’s foremost business communities, such as the International Business Council and the Community of Chairpersons, also gathered to engage in discussion with their peers2.

The backdrop to the 53rd Annual Meeting: the WEF Global Risks Report 2023

The WEF Global Risks Report 2023 was published in January 2023 and highlights the different areas where the world is at a critical inflection point. In its 18th edition, the results of a Global Risks Perception Survey (GRPS) are presented, which collected responses from over 1,200 experts across academia, business, civil society, government and the international community on the evolving global risks landscape in the short-term (two years) and long-term (10 years). Complementing GRPS data on global risks, the report also draws on the WEF’s Executive Opinion Survey (EOS) to identify risks that pose the most severe threat to each country over the next two years, as revealed by over 12,000 business leaders in 121 economies3.

The report revealed that energy, food, inflation and the cost-of-living crisis are considered to be the most significant global risks. The cost-of-living crisis has been ranked as the most severe global risk over the next two years, followed by natural disasters and trade and technology wars. However, failure to mitigate and adapt to climate change were ranked as the two most pressing risks over the next 10 years, with biodiversity loss and ecosystem collapse regarded as one of the most rapidly escalating global risks in the long-term. Geoeconomic confrontation, cyber insecurity, widespread cybercrime, large-scale involuntary migration and the erosion of social cohesion and societal polarisation are global risks that all feature in the top 10 over the next decade3.

World Economic Forum Global Risks Report 2023 Source: World Economic Forum

A call for urgent and collective action

Despite the range of risks that are occurring simultaneously worldwide, a shift away from a focus on short-term results (i.e. “short-termism”), crises-driven mindsets and solo approaches is a strong step to effectively manage and limit their consequences. The WEF has identified four key principles that are crucial to prevent a worsening of the risks outlook3,4:

  1. Although risks may have short- and long-term impacts, leaders must revaluate their perception of risk and act in the shortest timeframe possible (i.e. today) to address them. In today’s risk landscape, this means leaders must collaborate now to address climate and socioeconomic issues.

  2. There is a need for business and governments to invest in multi-domain, cross-sector risk preparedness by building societal resilience through financial inclusion, health, care, education, and climate-resilient infrastructure.

  3. The abundance of crises affecting humanity and the environment has caused nations to operate in a more insular manner. Despite the importance of national preparedness, there is a fundamental need for international coordination, data sharing and knowledge exchange to deal with several global risks, such as technology governance and climate change.

  4. Accurate predictions of risk in terms of timescale and impact must be bolstered at a global, national and institutional level. To strengthen the ability of leaders to better understand global risks, scenario analyses, scanning multistakeholder perceptions, appointing a risks officer function, and finding data on weak signals are all valuable ways to aid leaders in this process.

What does this mean for our future?

The world is facing several sustainability challenges that present an immediate threat to humanity and nature3. Given the scale, complexity and urgency with which they need to be addressed, pessimism and a feeling of futility abounds. Nevertheless, it was clear from the WEF’s 53rd Annual Meeting that international cooperation, holistic approaches and solidarity are key to tackling and preventing sustainability crises.

Bold leadership and cohesion across country borders is needed to improve the state of the world. If we all work together now, there is good reason to feel hopeful and optimistic about the future.

Author: James Beiny, Consultant at Simply Sustainable

1. https://www.weforum.org/about/world-economic-forum
2. https://www.weforum.org/events/world-economic-forum-annual-meeting-2023/about/meeting-overview
3. https://www3.weforum.org/docs/WEF_Global_Risks_Report_2023.pdf
4. https://www.weforum.org/agenda/2023/01/davos-2023-global-risks-report-how-to-solve-the-world-s-biggest-crises/

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