Global businesses are rapidly moving forward in implementing sustainability reporting and ESG practices, fueled by a combination of voluntary guidance and pending regulatory requirements. Significant strides in corporate sustainability practices are revealed through the KPMG Survey of Sustainability Reporting 2024 as global leading companies increasingly embrace such trends as carbon reduction targets, executive pay tied to sustainability, and biodiversity reporting.
The study highlights key trends and statistics, showcasing the growing emphasis on transparency and proactive ESG integration to address global challenges.
Key Insights from the KPMG Survey 2024
- Carbon Targets Adoption Soars
- An incredible 95% of the G250 now report carbon reduction targets. This has risen from a 2022 level of 80%. This is clearly an indication that climate change has become an issue that is crucial to business and society alike. And overall, in their sustainability reporting, 80% of these companies state that they carry out a materiality assessment, which helps determine where to focus these effects.
Half of the G250 are now using double materiality frameworks, which is a requirement under the EU Corporate Sustainability Reporting Directive (CSRD). This approach considers not only the financial impact that sustainability issues have on the company but also the impact that the company has on society and the environment.
Sustainability Leadership Strengthens
The survey shows that 56% of G250 companies now have dedicated sustainability leaders, up from 45% in 2022. This leadership growth underscores the increasing importance of embedding sustainability into business strategy and operations.
Moreover, executive compensation linked to sustainability metrics has also risen. Thirty percent of the world’s top 100 companies now include sustainability goals in leadership pay packages, compared to 24% in 2022.
Biodiversity Reporting Doubles
Reporting on biodiversity has doubled over the past four years, with close to 50% of G250 and N100 companies now disclosing their biodiversity impacts and initiatives. Such reporting further increases as an expanding understanding of biodiversity as an integral part of sustainability erodes regional disparities in reporting practices.
Getting Ready for Mandatory Reporting
European companies are leading the charge in aligning with mandatory reporting requirements, particularly the EU’s CSRD, which is being phased in over several years. Nearly half of European-headquartered G250 companies already disclose material topics in line with the EU Taxonomy and the European Sustainability Reporting Standards (ESRS).
Jan-Hendrik Gnändiger, Head of Global ESG Advisory at KPMG, remarked:
Mandatory sustainability reporting is almost upon us. The EU is phasing in its CSRD over several years, but the 2024 KPMG Survey suggests that many companies are adopting its measures before they are required to do so.”
Voluntary Standards and Their Role
In case of mandatory reporting, voluntary guidelines are not out of place in corporate ESG practices.
Global Reporting Initiative (GRI): Applied by 75% of G250 companies, GRI remains a foundation framework for reporting sustainability.
Task Force on Climate-related Financial Disclosures (TCFD): Nearly three-quarters of G250 companies report climate risks and opportunities against these recommendations, which are best practice globally
Sustainability Accounting Standards Board (SASB): Adoption of SASB standards and regional stock exchange guidelines continues to increase, providing industry-specific insights into ESG performance.
John McCalla-Leacy, global ESG head at KPMG International added,
“We are making noticeable progress in supporting short-term and long-term business objectives through ESG reporting. The path ahead will take continued commitment, but the momentum is undeniable.”
The way of Sustainability Business as Usual
Survey outcomes point to the shift of mindset by the world’s largest companies, as they make it a standard business practice to include sustainability reporting. This is spurred on by regulatory pressure, stakeholder expectations, and realization that sustainability is part and parcel of long-term value creation.
For example, companies are embracing an increasing investment in energy efficiency, renewable energy, and decarbonisation technologies. This is akin to a global response such as the Paris Agreement and reiterates corporation responsibility to address climate change.
The Future
Climate, social, and governance challenges are pushing the world toward transparency and proactive ESG reporting. While great progress has been made in carbon and climate-related reporting, the survey points out the enormous task of achieving balanced, impactful disclosures in all three environmental, social, and governance pillars.
One key takeaway from KPMG findings was that companies embracing comprehensive ESG practices better position themselves in the face of regulatory changes, stakeholder expectations, and long-term value creation.
Conclusion
The KPMG Survey of Sustainability Reporting 2024 shows that companies are signing up to ESG practices at a galloping pace across the world. With carbon reduction targets, biodiversity reporting, businesses are increasingly integrating sustainability into all aspects of their businesses.
The true way forward is to press on with innovation, leadership, and collaboration as mandated reporting takes hold in the form of the EU CSRD. As John McCalla-Leacy put it so well: “We can do it. We are doing it. Let’s keep going.”
This leads to a more holistic approach to ESG, addressing global challenges but also laying a foundation for a more sustainable and resilient future for businesses and society at large.