When businesses talk about ESG, they often focus on ambitious goals and future commitments. But with new reporting legislation coming thick and fast, ensuring compliancy isn’t just about the future anymore – it’s about the everyday.
- New legislation is setting higher standards for the breadth and depth of ESG reporting that businesses need to do.
- In some sectors, this is leading to innovation in the methodology for ESH analysis – showing that just making sustainability commitments isn’t enough
- Customers are becoming less tolerant of this too, with 7 in 10 Brits not believing that environmental claims by businesses are credible.
- Greenwashing isn’t the answer. To avoid damage to both your bottom line and your reputation, now’s the time for concrete action.
Compliancy is likely why experts have recently predicted that ESG will continue to impact businesses in 2023. Where companies have made their sustainability commitments very clear, some are falling short on the actual delivery and measurement of these ambitions.
Indeed, from our research report ‘Exploring the Environmental and Economic Opportunity of ESG’, we found that just 24% of businesses have a clear path to achieving their sustainability goals.
Recent legislation is making this path even harder to navigate. For example, off the back of a new agreement delivered at COP15, businesses will soon be required to look at their environmental footprint through the lens of biodiversity. Directed by the new Taskforce on Nature-related Financial Disclosures (TNFD), it’s not yet clear entirely what this guidance will entail, but it sets a new precedent on the rigour of ESG reporting.
And the FCA’s latest consultation on Sustainability Disclosure Requirements (SDRs) has led to a crackdown on greenwashing in the financial services. Investors are looking for more “innovative approaches” to sustainability credentials to satisfy their clients, such as the UN Environmental Programme and S&P’s new Nature Risk Profile, a methodology for providing scientifically robust analysis on a business’ impact and dependency on nature.
For businesses who have made sustainability commitments, ESG is now an issue of reputation. Are you backing up your claims with real action?
The fact is that customers are becoming more aware of sustainability, and less tolerant of baseless statements. A recent survey found that a shocking 7 in 10 Brits don’t believe environmental claims by businesses are credible.
However, staying quiet on environmental plans, or ‘greenhushing’, isn’t the answer. The vast majority (86%) of respondents said they want to see more transparency from businesses on sustainability initiatives and targets.
We explored the impact of greenwashing on our blog, where we discussed that even unintentional greenwashing can cause undoubtable damage to a company’s brand and reputation.
It’s a hard tightrope to walk, and one that’s not made any easier by the uncertain economic landscape. With edie recently reporting that 93% of CEOs are guiding their business through ten or more simultaneous challenges, finding an affordable and smart way to tackle ESG ambitions needs to be top of the boardroom agenda.
The key is to have resilience today to be prepared for tomorrow. Small actions can help make that a reality.
IN THE NEWS
- Greenwashing: making and interpreting environmental claims – Axil Integrated Services
- From nature restoration to social equity: 7 top ESG trends to look out for in 2023 – edie
- Are CEOs sidelining environmental sustainability as rising costs bite? – edie
- Survey: 7 in 10 brits don’t believe environmental claims by businesses are credible – edie
- ESG will continue to impact business in 2023, experts predict – Verdict
- Investors must innovate to stay ahead of FCAs SDR proposal – FT Adviser
- UNEP and S&P Global Sustainable1 launch new nature risk profile methodology – United Nations
- Exploring the Environmental and Economic Opportunity of ESG – Axil Integrated Services
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