Driving change with data: The evolution of sustainability in financial reporting

Driving change with data: The evolution of sustainability in financial reporting

The macroeconomic environment is undoubtedly a focal point in today’s discussions within wealth management, banking, and insurance sectors. However, the urgency of addressing climate risks is rapidly ascending the agenda, especially in the wake of Cop28’s focus on technology’s role in emissions reduction.

As Europe intensifies efforts to fulfill the European Green Deal, companies are eagerly seeking robust solutions to manage and report their sustainability performance. This surge in environmental consciousness is further propelled by a suite of ESG regulations from prominent bodies, elevating corporate responsibility to a new zenith.

Financial analytics API developer Kidbrooke recently delved into the changing landscape of sustainability reporting. 

Investors are increasingly leaning towards companies demonstrating proactive steps towards mitigating climate-related risks and seizing related opportunities. A PwC survey accentuates this trend, with a significant majority of investors favouring companies transparent about the integration of sustainability within their strategic framework. The significance of sustainability reporting transcends mere compliance; it demands the same level of assurance and reliability as financial statement audits. Herein lies the pivotal role of sustainability analytics technology, as discussed in Kidbrooke’s recent podcast featuring Celina Borg, sustainability adviser from Wellfish.

The landscape of sustainability reporting is undergoing a transformative shift with the enforcement of the Corporate Sustainability Reporting Directive (CSRD) by the European Union. This directive aims to standardise and elevate the quality of sustainability reporting.

Borg from Wellfish explained the directive’s requirement for companies to adopt a double materiality perspective, thereby enhancing the relevance and reliability of sustainability reporting. This approach not only scrutinises the impact of sustainability issues on the company but also gauges the company’s own influence on the environment and society.

Borg highlights a common pitfall in sustainability reporting — the clutter of operational measures lacking in financial or strategic context. Wellfish distinguishes itself by bridging this gap, offering a comprehensive sustainability management system that seamlessly integrates with bookkeeping systems. This integration ensures that carbon dioxide emissions, among other metrics, are precisely calculated based on financial data, lending credibility and strategic depth to sustainability reporting.

The convergence of financial and sustainability reporting is not merely a forthcoming trend but a present reality. The synergy between these sectors is paramount, not just for compliance but for presenting a holistic view of a company’s viability and future prospects. Kroll’s ESG and Global Investor Returns Study underscores this, revealing that companies with higher ESG ratings significantly outperform their counterparts. The insights shared by Borg highlight how Wellfish clients leverage sustainability reports for competitive advantages, operational efficiencies, and even strategies related to employee retention and engagement.

The wealth management, banking, and insurance sectors are increasingly aligning with customer values centered on environmental stewardship. Kidbrooke® exemplifies this alignment, facilitating digital pensions and savings journeys that incorporate sustainability preferences. Kidbrooke®’s role extends beyond data management to providing robust financial simulations that integrate climate scenarios, thereby enabling informed decision-making in a rapidly evolving economic landscape.

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