Key Impact Points:
- ESG Capacity Building: Companies are investing in cross-functional ESG working groups and hiring roles such as CSOs and ESG controllers to integrate sustainability into core operations.
- Business Benefits: Organizations recognize enhanced efficiencies, reduced risks, and strengthened stakeholder trust as key internal benefits from ESG reporting.
- Data Quality Challenges: Despite progress, data quality issues remain, with 88% of companies reporting significant difficulties, particularly in Scope 3 GHG emissions disclosure.
Why it matters
Deloitte’s 2024 Sustainability Action Report outlines the fast-evolving ESG landscape and the necessity for businesses to adapt. With new regulations like the SEC climate disclosure rule and global frameworks such as the ISSB standards, companies can no longer afford to take a “wait and see” approach. Leading companies are embedding ESG practices into their operations to gain internal and external advantages.
Key Findings
- ESG Capacity Building is on the Rise:
In the past year, companies have been building internal capacity for ESG. According to the report, 98% of executives have made progress toward sustainability goals, driven by the rise of cross-functional ESG working groups, the hiring of Chief Sustainability Officers (CSOs), and the integration of ESG into disclosure reviews.
“The creation of dedicated ESG teams and the rise of specialized roles indicate a strategic shift toward embedding sustainability into core operations.” — Kristen Sullivan, Audit & Assurance Partner, Sustainability and ESG Services, Deloitte & Touche LLP.
- ESG Reporting Brings Tangible Benefits:
Companies are increasingly recognizing the benefits of sustainability reporting. Among surveyed executives, 51% identified improved efficiencies, reduced risk, and enhanced trust as the top internal benefits. Externally, organizations are seeing improved brand reputation, talent attraction, and pricing power. This underscores the business case for prioritizing ESG integration. - Data Quality Issues Persist:
While progress is being made, companies continue to struggle with data quality, particularly in disclosing Scope 3 GHG emissions. More than 88% of companies cited data challenges as one of their top three issues, reflecting the complexity of measuring and reporting accurate ESG data. Despite the final SEC rule not mandating Scope 3 emissions reporting, global standards like the CSRD and IFRS are pushing organizations to advance their disclosures.
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What they’re saying
“In the rapidly changing ESG landscape, we’ve seen considerable strides among businesses. While challenges still exist, the commitment to sustainability is becoming more evident as companies continue to unlock the potential of ESG insights.” — Kristen Sullivan, Deloitte & Touche LLP.
The Bottom Line
The 2024 Sustainability Action Report shows that ESG reporting is no longer optional but essential for businesses looking to thrive in a regulated, sustainability-focused world. Those who lead in ESG integration will position themselves for long-term success, while those who lag risk falling behind.
Read the full report here: Deloitte’s 2024 Sustainability Action Report
