The past year has seen more organisations embrace sustainability reporting, with many at the early phase of this journey. It has been a welcomed observation globally and locally.
However, while there was a lot to celebrate in the past year from adopting sustainability reporting, there is still a long way to go as many organisations are yet to develop their sustainability reporting strategy.
Starting a new year allows these organisations to refocus their businesses by embedding sustainability in their strategy and reporting on it.
Strong indicators point to increasing demand for sustainability reporting by stakeholders.
Therefore, organisations that have not started their reporting journey should plan to do so, and those already on their journey should embody a ‘continuous improvement’ mindset. Some of these indicators include the following.
First is the increased regulatory demand for sustainability or non-financial reporting. In the past year, regulators demanded sustainability reporting from organisations, including stock exchanges and central banks.
We have also seen the International Sustainability Standard Board preparing to issue baseline sustainability standards.
These regulatory demands use common frameworks such as the Task Force on Climate-Related Financial Disclosures, Global Reporting Initiative and Integrated Reporting.
Organisations should expect increased regulatory action in sustainability reporting in the New Year.
Secondly, given the extreme uncertainties in the operating environment, investors and stakeholders are seeking information on the impact of physical and transition climate risks on an organisation’s financial fortunes. Information on non-financial matters will enable investors with more intelligent decision-making when making investment decisions on their portfolios as they can include the impact of non-financial issues in their investment analysis.
Therefore, organisations should expect investors to demand reporting on non-financial matters impacting them.
Many organisations have set net-zero ambitions and low-carbon transition strategies with related targets.
Stakeholders would request more information on sustainability reporting to assess how organisations have performed against their targets. This aspect is critical for organisations as it highlights how well the organisation is maintaining or improving its long-term competitiveness.
Organisations should therefore continue to build their capacity to deliver quality, reliable and relevant sustainability reports in the new year.
The writer is an Associate Director at PwC Kenya.
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