Why sustainability reporting is vital to tackling climate change
- Expectations of the purpose of business, as well as how companies operate and deliver is evolving.
- The Forum understands the challenges they face and supports progress on convergent sustainability reporting standards.
- The lack of a universal sustainability reporting standard poses an obstacle to measuring the sustainability of business and tackling climate change.
Ten years ago did you consider which bank you used based on its green credentials, did you know anyone who was vegan, did it matter to you whether the company you worked for had a green ethos, and were your children learning about recycling, reuse and ecosystems in school? Possibly not, but odds are you do now.
In an era where conscious choices are being made about the environmental viability of every aspect of our lives, sustainability touches everyone and everything. It has to: an increasing number of the conditions necessary to human life as we know it are disappearing, and we now recognize that we’re responsible for this situation.
People care and green consciousness is growing
Fortunately, people care – and increasingly so. Yes, there are many other issues high on boardroom, policy and consumer agendas – whether it’s conflict in Ukraine, rising energy prices or the continued fallout of COVID-19 – but a sustainability mindset has taken hold and environmental literacy is stronger than ever, blazing an irreversible trend.
This has transformational repercussions for business; those companies that embrace sustainability as an integral part of their operating model are seeing their value increase. This is not just in terms of profits, but also in higher staff retention and engagement, greater customer loyalty, and improved access to markets and funding. With this shift towards sustainability come improving examples of best practice, better short, medium and long-term targets and regulation.
How to report sustainability
This amorphous trend requires the discipline of standardization and regulation. One area in which the World Economic Forum is particularly active is standardized sustainability reporting. Let’s be honest, this isn’t an exciting-sounding subject, but it is essential to progress in supporting everyday sustainability and ultimately its success.
Do you remember measuring your height as a child? That pencil mark on the wall or chart that progressively marched upwards, maybe with a date attached. You could measure your progress because you had a tool, in this case a tape measure, and a standard, either feet and inches or centimetres and metres. Measuring sustainability is no different, and for companies, it’s this type of yardstick that is needed not just to measure and compare progress, but also to hold themselves, and others accountable in meeting their climate-related targets.
Think of corporate accounting and its two major systems of measurement – the US GAAP and the IFRS – both of which offer a commonly-understood, legitimate, verifiable approach that extends across borders and jurisdictions. That’s what we are working towards; a globally-recognized, and importantly, comparable system that meaningfully measures how sustainable a business is.
Our planet is straining under the burden of a global population of nearly 8 billion people.
The World Economic Forum’s Centre for Nature and Climate accelerates actions on climate change and environmental sustainability, food systems, the circular economy and value chains, and the future of international development.
- Through the Global Plastic Action Partnership, we are bringing together government, business and civil society to shape a more sustainable world through the eradication of plastic pollution.
- The centre is championing Nature-Based Solutions. Global companies are working together through the 1t.org initiative to support 1 trillion trees by 2030. Since September 2021, over 30 companies have committed to conserve, restore and grow more than 3.6 billion trees in over 60 countries.
- Through a partnership with the US Special Presidential Envoy for Climate John Kerry and over 30 global businesses, the Forum is encouraging companies to join the First Movers Coalition and invest in innovative green technologies so they are available for massive scale-up by 2030 to enable net-zero emissions by 2050 at the latest.
- The centre is also bringing leaders together to make commitments to a circular economy approach. Globally, the Scale360° initiative will reduce the environmental impact of value chains within the fashion, food, plastics and electronics industries – a significant step in making the $4.5 trillion circular economy opportunity a reality. The African Circular Economy Alliance is funding circular economy entrepreneurs and circular economy activities in countries including Rwanda, Nigeria and South Africa. In China, the Forum’s Circular Electronics in China project is helping companies reduce and recycle 50% of e-waste by 2025.
- The Forum is also crowdsourcing solutions to the climate crisis through its open innovation platform, UpLink. Since 2020 this digital space has welcomed over 40,000 users who are working on over 30 challenges including reducing plastic ocean pollution, scaling efforts to conserve, restore and grow 1 trillion trees and innovating the production and processing of aquatic foods.
Contact us for more information on how to get involved.
What does a sustainable business look like?
Businesses are facing increasing pressure to deliver prosperity sustainably. We aren’t just talking about the impact a business, its operations and workforce have on the environment, but also its resiliency. A business that manages risks (including climate change) and disruptions well is regarded as resilient. This makes sustainability information critical to businesses and gets to the heart of understanding how they create or erode value.
That growing green consciousness mentioned earlier is integral to this. Businesses that fail to shift to a sustainable operating model will see their customer base shrink, fall behind in terms of technology, face tighter regulations, find it harder to compete and struggle when economic conditions are difficult.
The World Economic Forum doesn’t offer a solution; it accelerates progress towards one
The Forum is ideally placed to understand the short and longer-term challenges that businesses and different sectors face, and is helping shape the ecosystem and streamline the processes required for transformation.
On its platform, the Forum hosts a large and growing coalition of companies that are driving the sustainability agenda, and through its convening power, enables stakeholders to navigate the investment sphere.
In terms of sustainability reporting, the Forum is a strong advocate of convergence. Since 2019, it has been working with the Big Four accounting firms and consulted with more than 200 companies to produce the Stakeholder Capitalism Metrics (SCM). These offer a universal means for companies to report on their sustainability, and already more than 150 companies are using the SCM to chart their progress in meeting green targets, producing crucial, comparable data.
This work has resulted in a coalition of CEOs who support progress on convergent sustainability reporting standards. In turn, this is providing the International Sustainability Standards Board (ISSB) – which falls under the purview of the IFRS – with a sounding board for its work in creating a universally accepted sustainability reporting standard.
Measuring and managing sustainability
We know what we value – in this case a healthy and sustainable planet – and as such, understand that the impact we are having on it needs to be measured and managed.
Expectations of the purpose of business, as well as how companies operate and deliver is evolving, but the lack of a universal reporting standard poses an obstacle to tackling climate change.
This makes standardized sustainability reporting one of the most important topics on the agenda. By getting it right, we can better consider and accurately measure the impact that we are having on our future, helping ensure that there is a worthwhile future to enjoy.