Going beyond ticking a box
Sustainability reporting is no longer a niche consideration for businesses; it has become an operational imperative with wide-reaching implications. The emergence of robust regulatory frameworks like the International Sustainability Standards Board (ISSB) standards and climate-related disclosure legislation is driving companies to prioritise transparent and actionable reporting.
These standards aim to create consistency and comparability in sustainability disclosures, ensuring they deliver meaningful insights for stakeholders. However, achieving compliance requires companies to address key challenges, such as integrating sustainability metrics into financial disclosures, establishing governance structures to ensure data integrity, and preparing for assurance-readiness.
Nathan Brogden, Group Manager – Climate and Sustainability at Downer Group, highlights that ‘gathering data to meet required metrics and setting up robust governance structures’ are vital for aligning with the new regulations.
At the same time, the ISSB’s ambition to provide a global framework has faced hurdles as standards are interpreted and implemented differently across jurisdictions. Tamara Somers, General Manager – Sustainability and Impact at Xero, notes, “The biggest challenge we face in sustainability reporting is the different application of standards in different jurisdictions. As a global company, we will now have to prepare multiple, jurisdiction-specific reports.’ Somers continues, ‘Personally, I think this is the opposite of what the ISSB was intending when they delivered a global standard, but as the standards have become politicised through local implementation in each jurisdiction, we’ve seen enough tweaking of them to make it really complicated to respond. And I’m not sure that delivers any meaningful insights for users of the reports, which was the point to begin with.”
For sustainability leaders, navigating this added complexity demands meticulous planning and a deep understanding of global and local requirements.
A look ahead at an evolving regulatory landscape
Looking ahead, the evolving landscape of sustainability reporting is set to introduce new dimensions of accountability. Tamara Somers underscores two areas that will dominate future discussions: “In terms of what's next, I think the two big issues all companies will have to tackle in their reporting are how they are using AI, particularly GenAI, and the broader social and environmental impacts of that are; and nature and biodiversity.”
Artificial intelligence, particularly generative AI, poses significant opportunities and risks. From improving data collection to driving predictive analytics for sustainability outcomes, AI has the potential to revolutionise reporting. However, businesses must also address their environmental impacts, such as energy consumption and ethical concerns surrounding their use. Organisations that proactively integrate policies to manage AI responsibly will be better positioned to meet future disclosure demands.
The second emerging area is nature and biodiversity, gaining traction as stakeholders demand greater transparency on how companies manage their impact on ecosystems. This shift aligns with growing global efforts to recognise the interdependence between economic activity and natural capital. Companies must prepare to measure and disclose their biodiversity impacts, adopting frameworks like the Taskforce on Nature-related Financial Disclosures (TNFD) to ensure alignment with best practices.
Remaining compliant in the face of reporting challenges
As these new focus areas come into play, maintaining compliance with existing regulations remains daunting.
Connor McCauley, Head of Sustainability at JLL, emphasises the importance of aligning with the Australian Sustainability Reporting Standards (ASRS), noting that “it is all about ASRS – climate risk management and governance and the need for more rigour on emissions reporting. Not to mention preparing for limited and reasonable assurance.”
The push for assurance-ready reporting requires rigorous governance and data management systems, ensuring that emissions data is accurate and defensible.
Fiona Murfitt, Vice President – Sustainability at Evolution Mining, further highlights the need to focus on materiality, stating that the challenge lies in “continuing focus on creating value on what is material for the business.”
With the increasing complexity of reporting frameworks, the ability to streamline processes while delivering actionable insights is paramount.
Reaping the Benefits of Effective Sustainability Reporting
The future of sustainability reporting is not just about compliance—it’s about creating a competitive advantage. Companies that lead the way in integrating AI, addressing biodiversity impacts, and ensuring data integrity will differentiate themselves in the eyes of investors and consumers alike. Preparing for these changes means fostering cross-functional collaboration, investing in advanced technologies, and staying attuned to evolving regulatory and stakeholder expectations.
As businesses adapt to these demands, sustainability leaders must balance immediate compliance needs with strategic planning for the future.
Organisations that embrace innovation, build robust governance frameworks, and commit to meaningful disclosures will not only meet the challenges of today but also position themselves for long-term success in a rapidly changing world.
Tamara Somers, Nathan Brogden, Connor McCauley, Fiona Murfitt and 30 sustainability reporting experts and leaders will be speaking at the Sustainability Reporting Summit 2025 from 25-27 February 2025 at the Sydney Masonic Centre (SMC). Learn more.
To access the detailed conference program, download the brochure here.