The Impact of Mandatory Sustainability Reporting on Corporate Functions

Photo by VanderWolf-Images on iStock

September 11, 2024

Authors

Nine Weijenborg

Associate Director, Transformation and Financial Services, BSR

Nine Weijenborg

Associate Director, Transformation and Financial Services, BSR

Paris

Nine supports BSR’s work across various industries, including financial services, industrials and utilities, and energy and extractives. She focuses on design and implementation of sustainability strategies, reporting, stakeholder engagement, and governance.

Prior to joining BSR, Nine worked in PwC’s sustainability services practice, where she advised multinational companies on sustainability strategies. She focused on how organizations could integrate the Sustainable Development Goals into their strategies and practices to increase their positive impact and mitigate their negative impact. She also audited social and environmental data. Nine is a One Young World ambassador.

Nine holds an M.Sc. in Food Safety Law from Wageningen University and an L.L.M. in Law from the University of Amsterdam. She wrote her master’s thesis at the University of Cape Town, focusing on food innovations for local farmers.
Adam Fishman

Associate Director, Transformation, BSR

Adam Fishman

Associate Director, Transformation, BSR

New York

Adam works with BSR member companies across industries on sustainability management, including stakeholder engagement, materiality, strategy and reporting, among other topics.

Prior to BSR, Adam was a thematic expert on the Sustainable Development Goals (SDGs) with the International Institute for Sustainable Development, focusing on the linkages between climate, development, business, and sustainable consumption and production. He previously worked on the SDGs team at World Resources Institute. During his graduate studies, Adam interned at the World Business Council for Sustainable Development and was a Coca-Cola World Fund fellow with Conservation International, researching the strategic connections between the SDGs and corporate sustainability.

Adam holds a Master’s in Environmental Management from the Yale School of the Environment, specializing in Business and the Environment. He has a BA in Environmental Studies and Government, with a concentration in International Politics, from Wesleyan University.

Key Points

Sustainability teams are increasingly collaborating across departments to meet the demands of rapidly changing regulations and standards, such as the CSDDD and the CSRD.
BSR’s latest policy brief discusses the impacts of these requirements across key corporate functions—including Boards and the C-suite, finance, audit, procurement, marketing and IT—and offers actionable recommendations for adaptation.

As businesses worldwide adapt to new sustainability reporting requirements, the landscape of corporate governance is shifting. The introduction of the EU Corporate Sustainability Reporting Directive (CSRD), European Sustainability Reporting Standards (ESRS), the International Financial Reporting Standards (IFRS) Foundation’s inaugural Sustainability Disclosure Standards, and the US Securities and Exchange Commission (SEC) climate disclosure rule represents a significant evolution in how companies are expected to report on their sustainability efforts.

This BSR policy brief explores the implications of these regulatory changes on various corporate functions. By synthesizing insights from companies from a range of sectors navigating this new terrain, the brief provides a comprehensive overview of how these requirements affect different functions and offers actionable recommendations for adaptation.

Below is a high-level glimpse into the impact on key corporate functions, with many more insights detailed in the full brief:

Sustainability: Sustainability teams need to establish cross-functional committees and work closely with other departments to advise executive leadership and integrate financial and sustainability reporting.
C-suite: Senior executives must build accountability for sustainability by aligning executive compensation with sustainability metrics, upskilling themselves on material sustainability issues, and staying informed on ongoing efforts.
Board of Directors: Boards of Directors are required to sign-off on materiality and reporting, which requires enhanced oversight, updated governance structures, and expanded knowledge of sustainability topics.
Finance: Finance departments must hold sustainability data to the same level of rigor as financial data, align reporting timelines and ensure data accuracy.
Audit: Audit functions need to establish robust controls for sustainability data collection and verification, ensuring consistency and reliability.
Risk: Risk management teams must incorporate ESG risks into their frameworks, in order to provide a comprehensive view that includes emerging sustainability issues.
Legal/Compliance: Legal teams must stay abreast of new obligations, assess the scope of reporting requirements, and ensure compliance with various regulations.
Procurement/Supply Chain: Procurement must assess and disclose impacts across the value chain, requiring increased transparency from vendors and improved supply chain due diligence.
Human Resources/Diversity, Equity, and Inclusion: These teams must align regional and global reporting requirements, especially concerning employee data and diversity metrics.
Marketing/Communications: Marketing and communications need to align sustainability narratives with those of regulated filings, ensuring consistency across all public communications and reports.
IT/Cyber: IT departments must support both finance and sustainability teams, as well as other functions, by improving systems to collect data and disclosures.

How to use the brief:

Use the recommendations provided as a starting point for navigating the complex landscape of mandatory sustainability reporting. Consider the extent to which the current state that we outline for each function applies to you and your company.
Get familiar with the concept of cross-functional collaboration to address new reporting requirements. The brief is organized by function to ensure that each department has visibility into a critical role it plays in achieving compliance and advancing the company’s sustainability goals. However, we also advise looking across the sections to understand where and how joint efforts can ensure efficiency while reinforcing each other.
Share these insights with colleagues across different functions and engage in discussions to explore how you can support one another in preparing for the upcoming reporting requirements.
Use it to help us help you! If you have follow-up questions or require tailored support in a particular area, BSR has developed a range of service offerings that support companies on their sustainability and compliance journeys.

Companies interested in discussing the topic further are welcome and encouraged to join the Future of Reporting initiative, which has been closely tracking regulatory developments.