The power of focus: Making reporting really worthwhile
In the rapidly evolving landscape of corporate responsibility, holistic reporting (i.e. including sustainability) has emerged as a critical component of demonstrating the effective execution of business strategy. However, a trap organisations can fall into is to view this process primarily as a regulatory obligation, where it then may become a resource-intensive exercise that yields less tangible benefits than costs. This perspective overlooks the significant potential for value creation inherent in robust sustainability reporting practices.
As we navigate increased stakeholder scrutiny and a growing emphasis on environmental, social and governance performance, we challenge businesses to reassess their approach to sustainability reporting. Forward-thinking organisations are leveraging sustainability reporting as a strategic tool to drive innovation, enhance operational efficiency and secure competitive advantages.
In this blog post, we advocate the transformation of sustainability reporting from a compliance burden to a value-adding business process. We examine how effective reporting can inform strategic decision-making, improve access and cost of capital, foster stakeholder trust and ultimately contribute to long-term business success. By aligning sustainability initiatives with core business objectives, companies can both meet compliance requirements and uncover new opportunities for growth and resilience in an increasingly complex global market.
The evolving landscape of reporting
Recent data indicates a significant shift in the perception and importance of sustainability performance and progress:
- The PwC 2023 Global Investor Survey reveals that 75% of global investors now seek corporate reporting on societal and environmental impact, marking a substantial increase from 60% in 2022.
- Notably, 75% of these investors specifically request this information in monetary terms, up from 66% in the previous year.
- Furthermore, 81% of investors seeking quantified impact information believe it would yield tangible benefits for companies.
These statistics underscore the growing recognition that sustainability performance is intrinsically linked to overall business performance. Consequently, failing to adapt to sustainability risks and capitalise on related opportunities is increasingly viewed as a suboptimal business strategy - one akin to value erosion if not addressed.
Beyond compliance: Extracting value through holistic reporting
While regulatory compliance remains crucial, the true value of sustainability reporting lies in its potential to drive business improvement and promote growth. This can be achieved through several key mechanisms:
Strategies for transformation
To ensure that sustainability reporting generates value rather than largely consuming resources, organisations should consider the following:
The multifaceted benefits of value-driven sustainability reporting
When executed effectively, enhanced reporting can yield a range of significant benefits:
Leveraging sustainability reporting for strategic advantage
We see a strong correlation between future relevance or success, and entities that can effectively integrate sustainability principles into their core business models and operational practices. When approached with strategic foresight, sustainability reporting transcends the simple dissemination of information. Instead, it becomes an invaluable instrument for charting a course towards enduring progress in an increasingly complex and rapidly evolving landscape.
In a series of upcoming posts, we will delve deeper into how sustainability reporting links with areas such as data management, tax, people and talent management, deals and transactions, assurance, finance and climate change. Stay tuned for key insights that will help your organisation leverage these for strategic advantage.
