Sustainability reporting is rapidly evolving, and the approach and reporting requirements differ from country to country. Toby Crewe, international solutions director - energy & sustainability services at Schneider Electric, gives us his views on what to watch out for in 2016
1. Data becomes more visible
According to research firm Verdantix, organisations have adopted more than 2,500 unique metrics for use in sustainability reports. Financial reports commonly use around 20. Are you reporting on the right metrics? The importance of selecting consistent, relevant and measurable performance indicators is paramount. 70% of companies across the globe still use spreadsheets to track data used in reporting, according to a 2012 survey by Oracle and Accenture. And that has led to reporting errors. Technology is emerging that seamlessly integrates information systems together and makes data visible and actionable.
2. CFOs become sustainability advocates
As sustainability programs increasingly demonstrate cost-savings and operational efficiency, CFOs — not just environmental advocates — are pushing for better reporting. 74% of CFOs now believe measuring and reporting their total financial and non-financial environmental and social governance impact contributes to long-term success, according to a 2014 PwC survey. As CFOs and other top executives become more invested in sustainability and renewables, reporting accuracy and reliability are essential.
3. Reporting becomes more prevalent
Worldwide reporting requirements have been multiplying, often unbeknownst to companies. The White House just announced 68 new signatories to federal climate action programs. The EU is now extending the scope of reporting beyond carbon to human rights. Even China is entertaining a cap and trade scheme. There are now more than 50 different global reporting programs and this number is only set to increase.
4. Transparency becomes the norm
Sustainability reports are becoming as important — and as widely viewed — as quarterly financial statements. That means companies have to become more and more transparent about how their reports are created and what the results are based on. As investors see the financial benefits of sustainability, they’re now making decisions based on sustainability reports. And as climate action becomes tied to company brands, a larger and larger microscope will be used to review reports. Both challenges demand a standard that sustainability reporting hasn’t been held to in the past.
5. Regional differences become amplified
Sustainability is now a global concern, but the approach and reporting requirements differ from country to country. So it’s important to understand the differences, and address regional needs and norms in reports. Multinational companies need to understand the drivers and obligations in each market and refine their sustainability and reporting efforts accordingly.
6. Legislation becomes a force for good
Policymakers are enacting sustainability-focused statutes faster than ever before and that is expected to significantly increase after COP21. The EU is an example of how a political structure can become an agent of change and drive the response to climate change. It can be extremely difficult for companies to know the rules they need to comply with in every region they operate. And the complexity is set to compound with a new wave of rules and regulations.
You can view the full ‘6 for 2016: Sustainability Reporting Megatrends’ report here.