Organisations should take a proactive approach to sustainability reporting

The sustainability reporting landscape has witnessed many milestones in the past few years. ILLUSTRATION | SHUTTERSTOCK    

By AKINYEMI AWODUMILA More by this Author

The sustainability reporting landscape has witnessed many milestones in the past few years, and regulators are demanding sustainability-related information in response to stakeholder demands.

However, across different jurisdictions, the timeline set for the mandatory adoption of sustainability reporting has been staggered to give organisations time to prepare for the adoption.

Some regulators have applied a size-based approach using revenue. In contrast, some other regulators have applied the public accountability basis, such as setting mandatory adoption dates for listed organisations and making it voluntary for non-listed organisations.

The principles used by regulators are underpinned by the recognition that organisations of a specific profile and impact should provide sustainability-related information to their stakeholders. However, many organisations not directly covered by the mandatory sustainability reporting requirement run the risk of becoming complacent, taking a reactive approach to applying the sustainability reporting standards.

Such organisations must avoid a wait-and-see approach by applying a proactive approach because the level of change across several jurisdictions could make an organisation suddenly caught up in a sustainability reporting obligation unprepared. It is not enough to make sustainability reporting adoption decisions through a compliance lens only.

Taking a holistic view enables organisations to prepare better and embrace sustainability practices, measurements and reporting in a manner that helps develop a resilient strategy and build internal capacity should the regulatory landscape change.

For example, an organisation may be requested by a prospective customer to provide emissions data or other non-financial information as part of a supplier onboarding process, even when the organisation has no regulatory obligation for such information.

As such, organisations should scan their operating environment to understand the changes occurring and consider them when adopting sustainability reporting. Another example is the utilisation of carbon credits by organisations which require information on emissions.

Organisations must be prepared to lead themselves even in the absence of regulatory action, and adopting a proactive rather than reactive approach to sustainability reporting is one way to demonstrate leadership.

Akinyemi Awodumila is a Partner at Deloitte East Africa. He is an author who writes and speaks widely on corporate reporting topics.