November 22, 2024
In October, we had the honor of attending FORUM24, the annual EHS & Sustainability Management Forum presented by NAEM. The conference, which is the largest annual gathering of sustainability decision-makers, was an excellent opportunity to discuss new directions in the ever-changing world of ESG reporting and how companies can take control of their sustainability narrative, wherever they are on their own sustainability journey.
At FORUM24, we presented six realities companies must face as they share their progress. Bigger than mere trends, these realities have all come up in our consultations with sustainability leaders and C-suite executives as we’ve helped them tell their ESG story.
We’ve recorded a 10-minute audio recording as an overview of our presentation. Feel free to listen or read our blog post.
- Sustainability communications have become a balancing act. Companies recognize the need to walk a fine line between demonstrating progress and attracting too much negative attention in an increasing politicized landscape. In a recent survey, more than two-thirds of CEOs reported that while they remain committed to their climate and DEI strategies, they also seek language that manages to avoid controversy.The best way to strike that balance? Know your audience, and that brings us to our next reality:
- Materiality matters. It only stands to reason — knowing your stakeholders is the best way to tailor your message. Check out our previous blog posts to learn how you can integrate materiality into your messaging.Double materiality is becoming the gold standard and will be required in such frameworks as CSRD. Data from GRI indicates that over 75% of large companies now use double materiality assessments.
The prevalence of materiality tells us something important:
- Optional may no longer be an option. Regulatory changes in Europe, California and New York mean that more companies are reporting for the first time or expanding their disclosures. Even private companies who may have been able to fly under the sustainability reporting radar are hearing from their stakeholders that sustainability matters to them.With these new imperatives, the next reality is not surprising:
- More frameworks are emerging, and companies are feeling the overload. There are over 600 reporting frameworks and voluntary standards today — perennials like GRI, SASB, TCFD, UN SDGs, CDP and EcoVadis, as well as newcomers like CSRD, the Task Force on Nature-related Financial Disclosures and the Task Force on Inequality and Social-related Financial Disclosures. With so many frameworks, it makes sense that 93% of reporting U.S. companies use more than one.With so many ways to report, many companies are asking how much is too much? Which brings us to the next reality:
- Disclosures and stakeholders are drowning in detail. It’s a real conundrum — companies are expected to report more data points, even as people’s attention spans continue to shrink. Although the average ESG report is now over 75 pages (and many reports more than double that), companies are reevaluating the form their reporting takes.Companies are increasingly developing materials customized for their stakeholders’ needs. We’re helping them create executive summaries for investors, Excel data sheets for analysts, highlights pieces for customers and internal videos and trainings for employees.
Such considerations are especially timely in light of our sixth and final reality:
- 2025 could the year the rubber hits the road. As companies set their sustainability goals, many used 2025 as their first mile marker. They may now need to signal that they won’t hit that goal, often for justifiable reasons: they need more time, the goal is no longer relevant, or maybe COVID simply changed everything. As we head into 2025, you have an opportunity to own the progress you have made — or be transparent on why the goals can’t be met, and reaffirming your commitment to that goal, setting a new goal or striving for continuous improvement.
Given these new realities and the challenges they present, we offer the following ways to get credit for your progress, talk about ongoing commitments and demonstrate your path forward. These strategies can also help you honestly discuss the realities, risks and difficulties that could impact your journey.
- Embrace materiality. As discussed above, this will enable you to focus people, resources, reporting and stakeholder discussions on the things that matter most.
- Welcome Legal and Internal Audit to the table. These departments can offer the structure and formality to assist with compliance implications and will help you improve your process and your data.
- Test new ideas internally first before your commit. Some “dry runs” before reporting to an additional framework or testing with a key stakeholder can demonstrate feasibility for leadership and help identify gaps before “go time.”
- Think about how you package your information. Long reports once a year might not effective enough, so think about ways to deliver custom messaging that meets audiences where they are.
- Be authentic, be realistic, be bold and be careful. Stay true to who you are as an organization, and be transparent about what’s possible and what’s needed. In areas where you are a recognized leader, own your story and showcase your leadership. At the same time, though, don’t overpromise or allow your reach to exceed your grasp.
When it comes to sustainability reporting, the goal is to be your best and tell your story in the best way possible. Get in touch today and learn how our team can help.
