What you need to know about environmental reporting

Today, companies stand at the forefront of tackling climate change, with their innovative approaches and initiatives being crucial in paving the way for a sustainable future. This role is particularly pronounced in the technology sector, where companies have a significant opportunity to contribute to reducing global emissions. The World Economic Forum’s 2023 report highlights that digital technologies could potentially lower global greenhouse gas (GHG) emissions by 6-20% by 2030, based on various scenarios and sectors. This potential for impact comes alongside growing demands from investors, consumers, and employees for businesses to adopt environmental initiatives and report on their progress transparently, a requirement increasingly echoed by global regulatory bodies. 

Environmental reporting, the process by which companies communicate their environmental impact and sustainability endeavors to stakeholders, has become a cornerstone of corporate responsibility. The Governance and Accounting Institute (G&A) notes that in 2022, 98% of the top half of Russell 1000 companies by market cap disclosed their sustainability practices through reporting. This reflects not just a best practice but also responds to the evolving landscape of regulatory demands that prioritize transparency, accountability, and collaborative progress in sustainability efforts. 

Historically, environmental reporting has been a voluntary practice, with companies choosing to disclose their performance and progress through public reports aligned with frameworks like the Global Reporting Initiative (GRI) or to entities such as the CDP (formerly Carbon Disclosure Project). However, recent years have marked a transition towards mandatory disclosures, driven by the need for comparable, defendable, and auditable data across industries. 

Related: Climate reporting in your sustainability report

The European Union, for example, has introduced the Corporate Sustainability Reporting Directive (CSRD), which updates and broadens the scope of reporting requirements to provide stakeholders with comprehensive information on companies’ social and environmental impacts. In the United States, the Securities and Exchange Commission (SEC) has finalized a rule enhancing climate-related disclosures, while international efforts are converging towards the mandatory application of the International Sustainability Standards Board (ISSB) IFRS® Sustainability Disclosure Standards (SDS). 

This direction towards mandatory reporting underlines the urgency of addressing climate change and the crucial role of transparent sustainability initiatives in mitigating its risks. With extreme weather ranked as a significant global risk by the WEF Global Risks Report, the importance of informed and proactive corporate action cannot be overstated. 

The future of environmental reporting promises further innovation, with scenario modelling and transition plans offering insights into potential future impacts, risks, and opportunities related to climate change. These advancements, along with more detailed assessments by rating agencies, underscore the importance of quality data and collaborative efforts across the value chain for accurate reporting. 

Source: Cisco