The latest KPMG Survey of Sustainability Reporting 2024 indicates that there is an accelerating global shift towards embedding sustainability into corporate practices, especially among the world’s largest companies. With environmental and social issues dominating global concerns, sustainability reporting has evolved from being a voluntary activity to one that is integral to corporate strategy, driven by both regulatory requirements and by stakeholder expectations.
According to the report, nearly all the world’s leading 250 companies as well as the majority of the leading 100 business enterprises in other countries have reportedly implemented sustainability reporting. Such evidence reflects how far the problem of ESG issues has permeated into mainstream business-related current imperatives. As a matter of fact, in the past two years, more companies with their carbon reduction targets aligned towards operations were registered as indicators of more intense methods taken on climate change mitigatory measures.
But the move goes far beyond carbon: Reporting on biodiversity, a topic not well covered by corporate reports, also gathered steam. Though still very far from the number of companies reporting on carbon targets, it was considerably higher in 2022 than at any other time. That trend represents another step in recognizing the imperative to preserve ecosystems as companies monitor their progress toward the world’s sustainable goals. It’ll be interesting to see one of the drivers of this momentum coming with the shift to mandatory sustainability reporting: The European Union’s Corporate Sustainability Reporting Directive, which has a deadline in 2025 and will change practices across companies worldwide. As the directive affects many, most of Europe’s reporting frameworks have begun to follow those of the CSRD already.
The CSRD’s focus on “double materiality” – that is, the evaluation of the financial impact of sustainability issues on a business and the business’s impact on the environment and society – is now adopted by half of the world’s largest companies. It represents a fundamental shift in the view that organizations have toward their responsibilities, from compliance to adopting a more holistic approach toward sustainability.
Even with the push toward mandatory standards, voluntary frameworks and guidelines remain a major driver of corporate disclosures. The GRI, SASB, and the UN’s SDGs top the list of most adopted standards across industries and geographies. These frameworks remain well-established for companies to respond to diverse stakeholder expectations while regulatory requirements continue to get tighter.
One of the significant developments in this regard is that the recommendations by TCFD are gaining acceptance. Thus, the framework put together by TCFD in respect of disclosures related to climate risk and opportunities acted as a catalyst to bring improvements in the transparency and accountability in the reporting of climate-related information. International Sustainability Reporting Standard IFRS S2, an international sustainability reporting standard, being adopted from the principles of TCFD will further promote consistency and comparability in the climate-related disclosures all over the world.
The survey also reveals a positive trend in corporate readiness. Companies are proactively adapting their reporting practices for when the regulatory changes become effective. Such forward-thinking will not only make transition easier when new requirements come into effect but will also add to the strength of the companies’ reputations as sustainability leaders. The early adopters of good reporting practice are setting themselves up to lead in the competition through transparency and accountability to investors, customers, and other stakeholders.
Rise in sustainability reporting reflects an increasing awareness of the corporate world to their role in promoting sustainability and dealing with global challenges. New horizons set by regulatory frameworks, such as the CSRD, have led companies increasingly to include sustainability as part of long-term success. The KPMG report stresses that reporting on sustainability is no longer optional or niche-it has become a standard practice for leading companies worldwide.
Among the indicators of a much greater, larger evolution in the definition of value that business can define, though, is the integration of biodiversity and climate-related risks in corporate strategies. When doing so, such companies help mitigate risk but unlock, at the same time, opportunities for innovation and resilience. Sustainable supply chain practice, emission reductions, as well as protection of the ecosystem-all bring corporate interest in line with broader, societal objectives.
This brings forth from the Survey of Sustainability Reporting 2024 some image of where sustainability practices stand at today and, at the same time, provides a glimpse into how things are going to happen in the future of corporate accountability. As companies get finer in their reporting structure and expand their scope of disclosure, this move towards mandatory reporting is another stride in this global journey to sustainable development. With critical risks from climate change, biodiversity loss, and social inequality, the commitment of the business community to transparency and accountability has never been more important. The story of the evolution of sustainability reporting, as captured in KPMG’s latest survey, underlines the potential of corporate action to drive meaningful progress toward a sustainable future.