ENSURING THE VALUE OF SUSTAINABILITY REPORTING

Aisling Eyers, Cora Buentjen and Dr. Rory Sullivan

Chronos Sustainability has worked closely with LSEG (London Stock Exchange Group) to develop comprehensive new guidance on sustainability reporting. The Guide provides practical support to help companies get the most from the changing sustainability reporting landscape, with a focus on ensuring sustainability-related activities are genuinely useful to investors and maximise business value.

Corporate sustainability reporting is changing.

In recent years it has moved from a ‘nice to have’, based on voluntary disclosures, to a growing part of compliance, as reporting requirements become mandatory in Europe and beyond, and as sustainability has become more integrated into financial reporting. The scope of issues that companies are expected to report on is also widening. Climate change remains a focus, but human rights and nature are now also on the agenda for regulators and wider stakeholders.

In many countries, company directors are now required to formally confirm that the data and information presented in sustainability reports are accurate and that the interpretation of these data and information are fair and reasonable. To add to this, the extraterritorial nature of regulation such as CSRD (the EU’s the Corporate Sustainability Reporting Directive) means that many companies may be captured by mandatory requirements even if they are not domiciled in the reporting jurisdiction.

These changes have changed the importance assigned to sustainability reporting. The resources allocated to data collection, analysis, checking and assurance have grown significantly in many companies.

Insights and reflections

LSEG’s ‘Guide to Sustainability Reporting’ helps sustainability and reporting professionals to understand and manage these complexities.

It explains how companies can harness these new reporting requirements to extract value from sustainability reporting, with a particular focus on how companies can communicate their business strategy and direction to investors and other key stakeholders.

The Guide has a specific focus on investors, and the ESG research providers who work with them, providing companies with critical insights on what information this market requires, how they use it and what good reporting might look like. The guide includes insights on:

Why companies need to report on sustainability including details on the changing regulatory landscape and how reported data affects investors decision making and, in turn, companies access to capital.
What to report, specifically the importance of materiality in informing relevant topics to report on, and how to provide investors with decision-useful data.
How to plan for reporting and how to use risk assessment and climate scenarios in reporting.
The evolution of sustainability reporting and specifically how companies can be future-fit for these changes.

As this guidance makes clear, reporting is not about compliance. Taking this narrow view will limit the opportunities to companies in terms of enhancing companies’ operational efficiency, external stakeholder perceptions and access to capital to name just a few.

Chronos’ View: The Guide helps companies and investors speak the same language on sustainability

In the ever-changing landscape of corporate sustainability reporting, the LSEG guide plainly explains the fundamentals of how investors and companies can successfully communicate on sustainability.

It makes clear both how sustainability-related data and information is transmitted from companies – directly and via ESG data/information providers – to investors, and how investors use that data and information. It reinforces the importance of integrating sustainability and financial reporting – and of explaining how sustainability aligns with corporate strategy to create short and long-term value for the business. It also points to the importance of constructively and helpfully engaging with ESG data and information providers given their critical role helping many global investors to assess sustainability risks, opportunities and impacts.

To access the guide, please see here.

Chronos Sustainability14 January 2025