Sector News

EY asks: can reporting encourage sustainability investing?

March 24, 2024
Sustainability

As companies invest increasing amounts of capital into sustainability, data and reporting becomes a priority.

Companies need to prove to stakeholders that their investments are driving value and creating results, as well as meet increasing regulatory requirements from governments, suppliers and partner agreements.

As reporting becomes an essential, EY argues that the levels of accuracy and accountability that are needed are becoming harder to achieve.

“Trust in sustainability information is arguably declining rather than improving,” says Matthew Bell, EY Global Climate Change and Sustainability Services Leader.

“This is due to increasing concerns about greenwashing (a process, when an organisation spends more resources on marketing itself as environmentally friendly than on actually minimising its impact) and green-wishing (belief that voluntary sustainability efforts are closer to achieving the necessary change than they really are).”

What does this look like in practice? On a consumer level, individual retail customers no longer believe in sustainable labelling, requiring retailers to go above and beyond in demonstrating sustainability practices along the value chain, including showing interest in materials suppliers and Scope 3 emissions. There are currently no specific regulatory standards in showcasing sustainability to individuals at this level, which makes it difficult for organisations to report accurately and to the ever-developing standards of the modern shopper.

Financing the future of decarbonisation
The 2022 EY Global Corporate Reporting and Institutional Investor Survey highlights the disconnect between companies and investors on long-term strategy.

Whilst 78% of investors surveyed think companies should make investments that address sustainability issues relevant to their business – even if it reduces profits in the short term – only 55% of the company finance leaders surveyed are prepared to take that stance. An overwhelming 80% of investors surveyed say that too many companies fail to properly articulate the rationale for long-term investments in sustainability, which can make it difficult for them to evaluate the investment.

This highlights an issue in uniting long term sustainability strategy into wider company strategy, as well as the mobilisation of capital to back it.

The report shows that there are three priorities for companies and those leading corporate reporting within their organisations:

  • Focus – what is material? What really matters? Focussing creates more financial value and unlocks action.
  • Use framework – productively using governance and accountability frameworks drives results, and therefore capital.
  • Be ambitious – the companies making waves in the sustainability space are the ones taking big steps to decarbonise, making big commitments towards net zero, and being ambitious with their goals. They’re also the ones attracting the attention and support to achieve these goals.\

By Charlie King

Source: sustainabilitymag.com

comments closed

Related News

May 17, 2024

Are economic clusters ready for the green transition?

Sustainability

From the tech innovators of Silicon Valley to the leatherworkers of Tuscany and the textile hubs of South Asia, economic clusters make the world go round. Today, however, policymakers face a pressing new challenge: the need to help economic clusters rapidly adapt to the green transition—and to effectively navigate the challenges and opportunities it brings.

May 11, 2024

Bain & Company report: The sustainable factory of the future

Sustainability

The factory of the future is here. And yet… most machinery companies are not capitalising on it fully. Bain & Company, a global consultancy has released its ‘Machinery And Equipment Report 2024’. The report estimates OEMs leave 30% to 50% of productivity value on the table

May 4, 2024

Unlocking the future with clean energy: a global imperative

Sustainability

We have come a long way in the last decade – nearly 1.1 billion people had no access to electricity in 2014; by end of 2023, this number reduced by about 350 million people. The share of renewables in the final energy mix has gone up substantially, with total energy consumption up by about eight percent.

How can we help you?

We're easy to reach