Addressing complex climate, social, and geopolitical issues and addressing ESG priorities is more important than ever. Sensing the urgency, almost all of the G250 global group of companies and four-fifths of the N100 groups have adopted both sustainability reporting and carbon targets, according to KPMG’s Survey of Sustainability Reporting 2024.
The survey reveals that some companies have already changed practices before the move to mandatory reporting on sustainability under the EU’s Corporate Sustainability Reporting Directive (CSRD) standards. The directive applies to an initial group of companies for reports on financial years ending from December 31, 2024, with some having until 2029 to publish their first compliant reports. However, some companies, mainly European-headquartered or with activities in Europe, are already preparing for CSRD such as by reporting material topics by the European Sustainability Reporting Standards (ESRS). Nearly half of European companies in the research already make disclosures using the EU Taxonomy.
Double materiality, required under CSRD, is now used by half of the largest companies. Nearly four-fifths of both the G250 and N100 groups use materiality assessments. The larger G250 companies are more likely to use double materiality processes that assess both impacts on society and the environment and how this affects their financial performance. Double materiality is the most complete form of materiality assessment and is a cornerstone of compliance with the EU’s CSRD, so some of those adopting it are likely to be doing so to prepare for it becoming mandatory.
Despite moves towards mandatory reporting, voluntary guidelines and standards remain widely used. GRI remains the most popular standard, with three-quarters of G250 companies using it and nearly as high a proportion of the N100 groups. There have been bigger increases in use for both SASB and stock exchange guidelines over the last two years, although from lower bases. Their adoption varies significantly by country and region, with all surveyed companies in Saudi Arabia using its stock exchange guidelines and two-thirds of those in the Americas using SASB.
Reporting on biodiversity continues to increase. Around half of both the G250 and N100 groups now report on biodiversity, up from around one-quarter four years ago, although growth has been slower in the last two years.
Adoption of TCFD recommendations continues to rise. Nearly three-quarters of G250 companies report climate risks in line with TCFD.
The significant increase in the adoption of sustainability related KPIs linked to board remuneration, for example, which is a well-established method of driving sustainable business transformation, suggests that companies are increasingly recognising the role that sustainability can play in business performance.
Going forward, companies will need to invest in robust reporting frameworks, data management systems, and transparency practices to meet stakeholders’ expectations and manage the risks and opportunities associated with sustainability.”
John McCalla-Leacy, Head of Global ESG at KPMG International, said: “KPMG’s findings – and the fact that there are more sustainability leaders within executive teams at the boardroom than ever before – are clear evidence that we’re making solid progress on the journey toward greater transparency and positive corporate actions to address environmental, societal and governance challenges. An increasing number of today’s investors are now taking non-financial data just as seriously as financial data. The mainstream view today is that businesses that measure and report ESG risks – clearly and in-depth – are also likely to manage these risks better and deliver greater long-term value.
Jan-Hendrik Gnändiger, Head of Global ESG Advisory at KPMG International, commented: “Our research shows that sustainability reporting has become part of business as usual for almost all of the world’s largest 250 companies and a large majority of the top 100 companies in each country, territory or jurisdiction. The last two years have also seen significant increases in the proportion of companies publishing carbon reduction targets to levels equivalent to those for sustainability reporting. While next year will see some companies having to report on sustainability, our research shows that many others are commencing or increasing their work in this area voluntarily. There are excellent reasons to do so, whether to prepare for mandatory requirements or to offer better information to investors, customers, employees, regulators or other stakeholders.”
Source: Peoplematters, 29th Nov 2024
