3 days ago3 min read
3 days ago3 min read
Oct 299 min read
98% of Companies Report Progress in Sustainability: Deloitte's 2024 Sustainability Action Report
Deloitte’s "2024 Sustainability Action Report" reveals significant strides in corporate sustainability practices, with 98% of companies reporting considerable progress toward their sustainability goals. This comprehensive analysis delves into key findings, regulatory changes, and industry-specific insights, providing a detailed overview of the current state of ESG (Environmental, Social, and Governance) reporting.
Overview of the 2024 Sustainability Landscape
Since Deloitte’s previous survey in December 2022, the global sustainability landscape has undergone substantial changes. Organizations now have greater clarity on expectations for reporting the financial effects of climate-related risks on their business and strategy.
Key regulatory drivers include:
California’s three climate laws
International Sustainability Standards Board (ISSB) standards
SEC climate disclosure rule
These frameworks drive companies to report on climate-related risks comprehensively. Additionally, areas such as nature and biodiversity are now under scrutiny, highlighted by the Taskforce on Nature-related Financial Disclosures (TNFD).
Organizations that previously adopted a "wait and see" approach may need to catch up, while those who took early action report significant progress.
Main Takeaways from Deloitte's 2024 Sustainability Action Report
Deloitte’s report underscores that ESG reporting has become a strategic priority for many companies:
98% of respondents indicated progress towards sustainability goals.
85% of companies report significant progress compared to a year ago.
More than half of the companies have established cross-functional ESG working groups.
98% of these groups meet at least quarterly, with 43% meeting at least once monthly.
13% rise in Chief Sustainability Officers (CSOs) overseeing ESG reporting since December 2022.
41% increase in the involvement of general counsel in ESG oversight.
42% increase in the involvement of executive leadership teams in ESG oversight.
44% of respondents reported that the full board oversees ESG.
42% indicated oversight by existing committees like the audit or compensation committee.
51% expect to see internal benefits such as improved operational efficiencies, risk reduction or strengthened trust with stakeholders from enhanced ESG reporting.
57% of executives cite data quality as the top ESG data challenge, with 88% reporting it as one of the top three challenges.
Only 15% of companies are preparing and disclosing Scope 3 GHG emissions.
99% of respondents plan to obtain assurance or engage in assurance readiness.
This increase in dedicated resources and leadership engagement signifies a robust commitment to advancing ESG goals within organizations.
Survey Participants in Deloitte's 2024 Sustainability Action Report
Deloitte's 2024 Sustainability Action Report gathered insights from a diverse group of executives to ensure a comprehensive overview of ESG practices across various industries.
The survey included:
300 executives at publicly owned companies with a minimum annual revenue of $500 million.
Additional surveys expanded the total sample size to 250 in each of the following industries:
Consumer products
Financial services
Life sciences and healthcare
Oil and gas
Technology, media, and telecommunications
Types of Executives Surveyed:
Senior finance executives
Accounting executives
Sustainability executives
Legal executives
Minimum Seniority:
Directors
Chief risk officers
General counsels
Chief legal officers
Chief sustainability officers
This diverse group of participants provided a robust and varied perspective on the current state and future directions of ESG reporting and preparedness.
Key Developments in ESG Reporting
Expansion Beyond Climate-Related Disclosures
One significant development is the regulatory expansion beyond climate-related disclosures to include broader environmental issues. The TNFD framework, for example, guides companies in reporting nature-related impacts, reflecting the growing importance of biodiversity and ecosystem services in sustainability practices.
Data Quality Challenges
Data quality remains a significant issue:
57% of executives cite data quality as the top challenge.
Completeness and consistency of GHG emissions data, particularly Scope 3 emissions, pose ongoing difficulties.
Despite these challenges, substantial progress has been made in adopting assurance for ESG data, with 99% of respondents planning to obtain or already obtaining assurance.
Regulatory Landscape and Implications
The evolving regulatory landscape has profound implications for corporate ESG reporting:
SEC’s final climate disclosure rule, published on March 6, 2024, represents a major regulatory development.
Frameworks like CSRD and IFRS S2 require comprehensive disclosure of climate-related risks and GHG emissions, including Scope 3 emissions.
15% of companies currently prepare and disclose Scope 3 GHG emissions, highlighting a significant area for improvement.
Industry-Specific Insights
Different industries face unique challenges and pressures.
For instance:
Oil and Gas Sector: Significant investor pressure, with 49% of respondents citing investors as a key influence.
Technology, Media, and Telecommunications (TMT) Sector: Most pressure from consumers and non-governmental organizations.
Disparities in GHG Emissions Reporting:
Oil and gas companies disclose more Scope 2 GHG emissions (59%) than Scope 1 (48%).
Industry-specific guidance and support are needed to enhance the comprehensiveness of GHG emissions reporting.
Future Directions and Strategic Recommendations for ESG Reporting
Deloitte’s 2024 Sustainability Action Report highlights significant progress in ESG reporting while underscoring the challenges that remain. As regulatory landscapes evolve and sustainability's importance grows, companies must enhance their reporting capabilities, address data quality issues, and ensure robust governance frameworks.
These efforts are crucial for:
Meeting regulatory requirements
Driving business value through improved operational efficiencies
Reducing risks
Enhancing brand reputation
By staying informed and proactive, organizations can navigate the complexities of sustainability reporting and contribute meaningfully to global sustainability goals.
The insights from this report provide a roadmap for companies striving to achieve excellence in their ESG practices, emphasizing the importance of strategic planning, leadership engagement, and continuous improvement in sustainability reporting.
To access the report click here.
We invite you to join our vibrant ESG community, a collective force driving positive change. This is your opportunity to be part of a dynamic network where knowledge, best practices, and innovative ideas are shared freely, empowering you to make impactful decisions.
Together, we can amplify our efforts to shape a sustainable future.
Join us and become a catalyst in the global movement towards a more equitable, environmentally responsible, and socially conscious business landscape.
