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Climate Reporting: Leadership Trends 2024

Granger Reis Sep 23, 2024

In 2024, the landscape of climate reporting is evolving rapidly, with CEOs and CFOs at the forefront of this transformation.

As a B Corp we know that this is ever-more important and proving impact to shareholders and stakeholders alike is growing in the CXO agendas.

It is clear to see that this evidence-building from top executives will shape the future of sustainability in industry.

From innovative reporting frameworks to strategic initiatives, we explored how today's leaders are setting new benchmarks for environmental stewardship and corporate responsibility.

Current Status

As companies increasingly commit to sustainability and net-zero targets, the responsibility for climate reporting sits squarely with the CEO and CFO. This change is driven by the need for meticulous data gathering and compliance with complex sustainability legislation.

According to PwC, the CEO agenda in 2024 is more complex than ever, encompassing a wide array of challenges and opportunities, including climate reporting.

CEOs are increasingly recognising the importance of trust as an intangible asset that can instil confidence in bold, fundamental changes such as climate reporting.

This trust is crucial for leading the reinvention of organisations to capitalise on change and deliver returns to stakeholders. PwC highlights that being at the forefront of emerging issues, such as climate reporting, can open new growth avenues and enhance a company's reputation for societal leadership.

However, current climate reporting systems are complex, with many different frameworks and standards demanding the disclosure of messy, and often imprecise, data CEOs are relying heavily on their CFOs to ensure this is managed accordingly.

According to Raconteur, there are serious repercussions for oversights and omissions, from regulatory penalties and loss of investment to brand and reputational damage.

Sticking Points

Businesses can suffer damage as a result of ESG-related misconduct. A 2022 study by accountancy firm Grant Thornton found that reporting missteps can cost the average FTSE 100 firm more than £1bn in lost value.

And, as reporting and disclosure regulations become increasingly stringent, the consequences for nonfeasance will only become worse. In the year ahead, new international and domestic regulations will add layers of complexity to climate reporting.

Finance leaders – and the C-Suite in general – must understand what they can do to get ahead of these changes or at least not fall behind.

This is to ensure that the data underpinning climate pledges and commitments is robust and trustworthy, showing in real time the depth of effort being made to meet both regulatory and stakeholder expectations for long-term business models that still return a profit.

The Opportunity at hand

A recent Gartner survey revealed that 69% of CEOs view sustainability as a growth opportunity. This perspective underscores the strategic importance of integrating sustainability into business operations.

CEOs are increasingly seeing climate reporting not just as a compliance requirement but as a critical component of their growth strategy. By leveraging sustainability initiatives, CEOs can drive innovation, improve operational efficiencies, and create competitive advantages. 

And we are seeing that the increase in climate reporting is being driven by CEOs who view it as both a necessity for regulatory compliance and a strategic opportunity for growth.

By focusing on trustworthy data and leveraging sustainability as a growth driver, CEOs are setting new benchmarks for environmental stewardship and corporate responsibility.

The GlobeScan/ERM Sustainability Institute Leaders 2024 Survey provided a comprehensive overview of the current landscape, highlighting key developments, challenges, and leaders in the field.

Much of it was focused on the impact of new legislation and disclosure rules, with a third of experts surveyed pointing to legislative action as the top sustainability breakthrough, while new sustainability disclosure standards are cited by one-fifth of the respondents.

To stay at the forefront, leading organisations must transform compliance into concrete actions that drive meaningful impact. And we already know through organisations such as Leader’s Quest and TED the evolving sustainability landscape requires a collaborative, innovative approach from governments, NGOs, and corporations.

Potential Backlash

Despite these positive developments, the Global Scan/ERM report also highlights a significant backlash against sustainability.

Over half of the surveyed experts report this trend, with more than eight in ten experts in North America observing it. Globally, 52% of experts believe that this backlash will slow the transition to sustainability in the coming years. While the issues at hand are critical, this can be understood by looking at the already rising pressures many leaders feel.

When it comes to Net Zero, there has been a 123% increase in publicly listed companies setting net-zero targets between 2021 and 2023.

And according to a Raconteur survey, nine in ten CFOs believe ESG issues will be a major focus of their role over the next five years, with 85% expecting an increase in mandatory climate disclosure.

However, only 22% of CFOs feel well-prepared to disclose climate-related risks and opportunities. There is still much work to do, with an understanding that this reporting requires a group effort from all executive team members due to the dispersed nature of ESG data.

Future Outlook

As climate reporting becomes more prevalent, CFOs in particular will need to develop the necessary skills and expertise to ensure this programme of transparency and action is not only embedded in the company culture but also creates the expected financial returns.

Capacity Building and Governance: Build the right team, ensuring the fit and effectiveness to ensure change is adequately resourced.
Oversight of Risk Management and Controls: Identify gaps between current disclosures and additional required information and address capture and control gaps. Expand as required.
Implications for Strategy: Assess sustainability-related risks and opportunities within the business and across the value chain. Define the threshold for ‘materiality’ and understand its implications. 
Preparation and Resourcing: Oversee appropriate preparation and resourcing to meet new compliance obligations. Proactively consider the implications for strategy, business planning, financial position, and performance.
Community and Initiative: Understand what investors need and collaborate with climate governance experts to share information and insight.

Ultimately, the responses to these issues will determine whether organisations benefit from new capital and growth opportunities or face challenges like accusations of greenwashing.

And, of course, underpinning all of this is the understanding that this is not all about reporting but driving the sustainability agenda through the whole organisation - ultimately ensuring both people and planet are protected for all our futures.