Consensus on new reporting standards is key to the future of sustainable business—and the planet

In today's rapidly evolving business and sustainability landscape, we’re in a watershed moment for reporting standards. Sustainability is becoming a decisive factor for stakeholders, and businesses will need to respond with transparent, investor-grade data and reporting. And while businesses have made progress, we aren’t quite there, with 87% of investors perceiving greenwashing to be within company reporting on sustainability performance. Trust in the quality of information is a necessity for our capital markets, and we all play a role in enhancing confidence by providing transparent, reliable and decision-useful information. 

Considering the significant impact of sustainability reporting, it is no surprise it was a driving topic during Climate Week NYC last month. With new reporting requirements being introduced at the state, national, and international level, I had the privilege of participating in a panel discussion with Emmanuel Faber, Chair of the International Sustainability Standards Board (ISSB) to discuss the challenges and complexities businesses are grappling with when it comes to sustainability reporting. 

Reflecting on my conversation with Emmanuel and other insightful conversations from Climate Week, here are my takeaways on what executives need to know:   

Interoperability Takes the Crown 

With new requirements and standards being introduced across different levels, interoperability is key in avoiding fragmentation within the sustainability reporting environment. Stakeholders are seeking standardization and clear reporting frameworks to enhance trust and make informed investment decisions. When faced with differing requirements and standards, it may be costly and ineffective for companies to effectively report to investors. Interoperability can help enhance transparent reporting, where companies can accurately share their progress with stakeholders, including investors, employees, customers and non-governmental organizations (NGOs). The current challenge lies in the wide range of formal and informal standards across authorities, possibly leading to confusion and hindering effective decision-making.  

The Need for Real and Trustworthy Data 

While sustainability reporting has gained significant traction, there is a pressing issue of trust in corporate sustainability disclosure. It is no longer sufficient for companies to rely on vague, ambitious value statements regarding their commitment to sustainability. To address this, it is crucial that companies take meaningful action to report data that is accurate, reliable and transparent. By collecting and analyzing solid data, companies can gain valuable insights into their environmental and social impact. This data-driven approach not only helps in holding ourselves accountable but also can help generate real opportunities for financial growth and innovation. 

Aligning Business and Sustainability  

Integrating sustainability, operational and financial narratives in reporting is paramount, as sustainability should be linked to value creation and long-term investments and transformation. These discussions should be integrated rather than separate, parallel discussions. Robust reporting processes uncover valuable data and information that help shape future strategies, enabling companies to align their business goals with sustainability objectives. To make sustainability disclosures work for everyone in the ecosystem, it is critical that management, governance and outside assurance align in the same direction. This accountability helps build trust and credibility, helping to strengthen partnerships and drive the company's strategy forward.  

Achieving consensus on new reporting standards is vital for the future of sustainable business and the planet. I encourage business leaders to recognize the power of ESG reporting in driving financial performance, building trust with stakeholders and aligning business goals with sustainability objectives. By adopting performance-based metrics, embracing transparency and ensuring the reliability of reported data, companies can unlock new opportunities and contribute to a more sustainable future.