Three ways enterprises can get on the path to being accountable and transparent in their sustainability reporting.

Sustainability. Transparency. Accountability. These are the corporate buzzwords permeating board rooms and investor briefings across the globe.

But why? Simply said: Market, client and consumer demand continue to rise. And now, environmental, sustainability and governance (ESG) regulations—including the pending US Securities and Exchange Commission (SEC) and European Union regulations—are filling the void to promote consistent disclosure to drive accountability.

While there is still much ambiguity around exactly what these regulations will look like, it’s essential for organizations to prepare now for higher quality, more timely and reliable reporting.

Finding the tools for the job

Climate change (or the climate crisis, as it is increasingly called) is bringing together the world’s governments and large, innovative companies, standing side by side. These organizations are looking beneath the surface to unearth the technologies and solutions that can decarbonize the economy. Based on the Science Based Targets initiative (SBTi) dashboard, more than 2,000 companies have set a science-based carbon target.

As companies move past press releases and commitments, they need the tools that can help facilitate decarbonization objectives. These tools should provide rigor, accountability and transparency to support the required measurement and performance. Investors, partners, customers and employees seek companies that are prime for long-term investments. These are the firms that understand the need to partner with like-minded companies (think: supply chain) and that leverage the data, technology and resources to provide results that are both measurable and transparent:

• Transparency. CEOs and organizations across the world have set and lauded their sustainability goals. Now it’s time to honor those goals with transparent reporting on progress.
  
  Transformation can emerge from transparency. The demand for disclosure acts as a forcing mechanism that drives accountability, which is exactly why investors demand this reporting in the first place.
  
  
• Accountability. Businesses are interdependent with the world’s social and environmental systems, making environmental issues also financial issues. Organizations should have board-level and C-suite roadmaps that illustrate which levers to pull to reach the targets for which stakeholders hold them accountable.
  
  Companies should have a disclosure strategy that integrates ESG performance into multiple avenues. A carefully conceived disclosure strategy can not only improve the quality of ESG performance information but also enhance trust and drive business performance.
  
  To unlock true accountability and change at the required speed, sustainability efforts should speak the language of Wall Street and, ultimately, be integrated into annual financial reporting. Common ESG reporting standards and agreed-upon requirements and frameworks continue to evolve to provide rigor and capital markets acceptance.
  
  The establishment of the International Sustainability Standards Board (ISSB) in November 2021 at COP26 provided authoritative and capital markets-accepted common baseline standards to be adopted by geographies around the world, which provide similar structure and accountability to financial reporting standards.

How to get started

Three steps can get enterprises on the path to measurable and transparent ESG reporting:

1. Engage your board. Identify board and management oversight on climate-related matters. Define clear roles, responsibilities and charters, and implement climate-focused educational sessions. Establish or refine a cross-functional sustainability council with clear roles, responsibilities, objectives, accountability and monitoring.
   
   
2. Establish controls over climate-related data by assessing the strength of existing processes and controls, identifying areas for improvement and establishing plans for climate-related disclosures. Be transparent when considering accounting and reporting implications associated with accelerated reporting timelines.
   
   
3. Leverage technology. It’s going to take technology and renewable energy (enabled by tech) to convince investors, consumers and regulators that change can be achieved.
   
   Technology investment is key to combating climate change. More than three-quarters of respondents to a Cognizant study (77%) list environmental sensors and Internet of Things (IoT) as important or very important to meeting their sustainability goals. The widespread deployment of such sensors could have valuable implications for traffic efficiency, wildfire response and more. Smart grids and artificial intelligence (AI) round out the top three technologies for sustainability investments, at 72% each.
   
   Emerging tech can catalyze current sustainability endeavors. While many respondents in the Cognizant study report using tried-and-true sustainability approaches such as eco-friendly lighting (63%) and renewable energy (57%), these more traditional approaches can be supercharged by new technologies. For example, conducting energy audits can be made easier and more valuable through AI and analytics platforms.

Inspire trust

With so much riding on a company’s successful implementation and governance of ESG, it’s critical that companies execute their ESG strategies with the same rigor and urgency as they do for all other strategic initiatives. The efforts should inspire trust from regulators and, ultimately, the communities they serve.

This blog was coauthored by Sophia Mendelsohn, Chief Sustainability Officer and Global Head of ESG at Cognizant, and Kristen Sullivan, Global and US Audit & Assurance Sustainability and Climate Services Leader at Deloitte.