In a recent survey conducted by EY, a significant 55% of CFOs have expressed concerns that their industry’s sustainability reporting might be perceived as greenwashing.
According to ESG News, the apprehension stems from the fear that inadequate due diligence and unverified claims could erode trust in sustainability efforts.
The 2024 Global Corporate Reporting Survey, which garnered responses from over 2,000 finance leaders and 815 institutional investors worldwide, underscores the growing scepticism regarding the realism of corporate sustainability targets. Nearly half of the finance leaders and over half of the investors doubt the achievability of these objectives, attributing their scepticism to the low quality of disclosures that do not convincingly demonstrate real climate action.
Moreover, an overwhelming 96% of finance leaders worry that their organisations’ nonfinancial data lacks the robustness needed for effective decision-making. They highlight issues with data formats and inconsistencies as significant challenges.
The survey also found that 50% of finance leaders are concerned about missing crucial sustainability targets in the upcoming years. While only 47% of them, along with 53% of investors, believe that most companies are on track to meet their sustainability commitments.
There has been a noticeable shift in focus towards nonfinancial drivers of value, with 69% of finance leaders reporting an increase in investor queries on these matters over the past two years. This shift underscores the intensifying scrutiny on how companies report and achieve their sustainability goals.
EY’s report also warns of the potential litigation risks that companies face if they are found to have overstated their sustainability achievements. “While disclosures are no doubt made in good faith, finance leaders clearly doubt that the necessary due diligence has been carried out,” the report states. For CFOs, it is becoming increasingly imperative to overhaul nonfinancial reporting practices to ensure that sustainability efforts are transparent, verifiable, and integrated into financial decision-making.
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