Understanding the sustainability reporting drivers now and in future
As sustainability-linked funding continues to grow and deliver comparable returns to traditional financing, organisations are going to embrace the reporting requirements attached to these sustainability-linked instruments.
The growing appreciation of sustainability has resulted in notable engagements across many societies.
As individuals and organisations within the public and private sectors get to experience first-hand the effects of sustainability-related matters ranging from climate change to health and social risks, sustainability is increasingly becoming a significant consideration for decision-making.
Therefore, data and information on sustainability-related matters become pertinent for decision-makers.
As more organisations invest in ESG reporting and disclosures, the sustainability reporting landscape will only continue to demand more information.
As a result, there is no turning back regarding sustainability-related information, and organisations must understand the issues influencing or driving the evolution of sustainability reporting now and into the future.
By appreciating these drivers, organisations can proactively manage their reporting obligations and become deliberate with their reporting due to an understanding of the motives shaping sustainability reporting. Some of the drivers organisations should consider are as follows:
The first driver is the expectations placed by stakeholders on organisations.
These include employees, investors, communities, suppliers and customers, to name a few. These expectations will continue to influence the direction of travel for sustainability reporting in the future. Organisations must keep track of the trends affecting these stakeholder demands to ensure they are met.
The next big driver influencing sustainability reporting is regulations. Regulations are a significant driver due to their obligation on organisations from a compliance perspective. The sustainability information organisations prepare and produce will continue to evolve due to regulatory action, and organisations must prepare to address these obligations now and in the future. The next big driver is financing.
As sustainability-linked funding continues to grow and deliver comparable returns to traditional financing, organisations are going to embrace the reporting requirements attached to these sustainability-linked instruments.
Therefore, organisations that want to attract funding from various sources will likely move towards sustainability reporting. The last big driver influencing sustainability reporting is the investment returns and innovative financial products generated from ESG investing.
As more innovative financial products are offered to investors, organisations will have to embrace the applicable reporting requirements.
As the transition to a low-carbon economy takes hold, issuers of these innovative financial products will have to provide information on their financial products to their investors.
