As we close 2024, many companies find themselves reflecting on the outcomes of their efforts over the past year. Whether driven by the need to comply with regulations or by core values and company culture, taking care about HOW these outcomes were achieved essentially brings you into the realm of "Sustainability."
For many, this term likely triggers thoughts of reporting and compliance—data collection, spreadsheets, or more advanced tools, along with numerous meetings, the coordination at senior level and even reaching an agreement on sentence structure and chapter headings.
These efforts are commendable and deserve congratulations. But don't be led to believe that that's all there is to sustainability. Sustainability reporting itself is not the end—it's a guiding tool for achieving meaningful outcomes.
And now, the game has changed. It is time to harness whatever foundational efforts you've made —not just for compliance or reporting—but to transform them into a strategic advantage that drives business growth and amplifies positive impact. Whether or not you have a formal sustainability professional or strategy in place, you've started. And now, it's time to up your game and WIN IT.
Things are getting serious
In the last 12 months, sustainability expectations have shifted from a goodwill gesture to a critical business imperative. The increasing regulatory environment is placing more focus on the production of the corporate sustainability report, and this is GLOBAL.
Previously, organisations reported their sustainability strategy voluntarily, using helpful frameworks like the Global Reporting Initiative (GRI). However, there is now an increasing number of organisations who will fall under mandatory sustainability reporting frameworks. This includes the European Union's 2023 Corporate Sustainability Reporting Directive (CSRD), as well as mandatory reporting announced in China, United Kingdom, Singapore, Malaysia, among others. In effect, it sets up sustainability disclosures to become as normal as making corporate financial disclosures.
Why do this? Part of the objective for more consistent sustainability frameworks is to ensure that stakeholders can make more informed decisions about who they do business with. But it's also an exercise in business resilience, ensuring that companies are able to continue to attract much needed investment in a market where environmental, social and governance (ESG) strategies are increasingly required to unlock the necessary business capital.
Surely this only affects public listed companies, right? WRONG.
In some jurisdictions, even large non-listed companies are required to disclose. More importantly, the standards that have been adopted for making such disclosures require reporting to include upstream and downstream value chains. In other words, suppliers and vendors to such reporting companies will also feel the burn.
The evolving regulatory environment demands more from companies, often without them realising the full impact these changes hold. Now more than ever, understanding these regulations is key to positioning your business to thrive.
What is the sustainability report actually for?
For those of us involved in the sustainability reporting business, it’s worth remembering that it is an output of a much bigger exercise – the strategic intention to pivot a company’s operations to often fundamentally change the way they do business.
If companies are going to be able to report on their sustainability strategy, then it needs to be a reflection of the real commitment across the organisation to more sustainable and ethical operations. Just as we want to make sure our brand communications reflect our true purpose, we need to make sure we are aligned, from leadership across the organisation, to the importance of sustainability for what we do. If not, then the sustainability report risks falling foul of greenwashing accusations and reputational damage.
You just need to follow the work of the UK Advertising Standards Association (ASA) to understand the implications of making unsubstantiated claims about your sustainable operations. There are real implications to getting this wrong, especially with more legal requirements such as the EU's Green Claims Directive as well as the precedence of a strew of climate and sustainability related litigation actions taken globally against corporations and even governments. Notably, 70% of the completed 'climate-washing' cases filed against companies decided in favour of claimants and the companies in question had to pay fines and/or make public announcements about their misleading claims.
And it's not just about the environmental aspects of a business. There is increasing focus on ethical business practices and regulations which require a sound knowledge of a company's supply chain. This is the way we truly get to impact the way we and others operate - and where we can effect real change through a committed and well reported strategy.
The lasting impact is a reputational one, which is why it's important that this isn't a report card exercise, but the result of a well developed and understood sustainability strategy. Often, greenwashing isn’t intentional. Rather, it is borne out of a lack of clarity around the main sustainability goals, and a pressure to have a credible narrative putting you ahead of your competitors. In contrast, if the intention is genuine, and the narrative matches, then the sustainability reporting process should result in a credible communication exercise which you can utilise to further your purpose and impact.
Being sustainable needs to be profitable
In the race to do the right thing for people and the planet, we can't ignore the need to do the right thing to ensure the business is profitable. Without business sustainability, then the positive impact that is delivered from its operations and products are lost.
This is where the compliance tick box for the sake of reporting can miss the point. There are an alarming number of organisations who set themselves a net zero goal and communicate this - without yet having an agreed way forward on how to achieve it - and how much it will cost them to deliver it. This essentially sets themselves up for a high-cost, losing game.
Checklist of 5 Must-Ask-Questions
So how can a company ensure its sustainability efforts are robust and genuinely maturing to be more sophisticated and impactful?
There are 5 Must-Ask Questions that company leaders, sustainability teams, and regulators alike, need to be asking and solving. In doing so, it would prevent sustainability initiatives from becoming mere costs for compliance but instead usable as strategic assets.
How does your sustainability strategy sit within your overall corporate purpose?
What will require a fundamental shift in the way you do business, if any
How will it benefit the business financially?
How easy will these shifts be to implement?
Have the right people been consulted?
Do you have the right expertise to implement?
If not, do you understand what external help is needed to ensure you are taking the right direction for your type of business?
Can you confidently turn your sustainability ambitions into actual targets that can be reported against?
Have you engaged your biggest advocates to manage the change (i.e. your employees)?
Are the trade associations or membership bodies you are signed up to still supportive of your strategy?
Are the value proposition and the sustainability commitments communicated by your leadership and sales teams aligned?
Conclusions
Sustainability reporting is no longer a "nice to have"—it's a necessity. Companies must elevate their efforts to navigate regulatory landscapes and harness the benefits of sustainability. It's no longer sufficient to highlight charitable contributions or peripheral recycling or tree planting efforts. By focusing on core operations and strategic improvements, you position your company to not only avoid pitfalls but also to flourish.
Moving into 2025, the opportunity lies in reimagining how sustainability can become an integral component of your business model—cultivating both positive social impact and generating new revenue streams. Aligning your business operations with sustainability isn't just good practice; it's smart business, positioning your company to thrive and deliver value in an ever-evolving landscape.
That said, sustainability reporting should not be seen merely as a report card; it's a powerful tool to transform business operations. Without clear ambitions from leadership, companies risk falling into the trap of greenwashing, which poses significant financial and reputational risks. In today's market, authenticity is paramount, and stakeholders—regulators, consumers, investors—demand real action.
Authors: Suzy Giles and Chin Lijin
Views in this article are that of the authors and do not explicitly represent official positions of Giles Global or Circular Business Association.
Giles Global is an ESG communications and change management consultancy working with organisations to help them navigate their journey towards a more sustainable future. We develop strategic communications and compelling narratives to support organisations in all of their sustainability engagement activities.
Circular Business Association (CBASS) is an ecosystem builder that aims to rapidly replace out all unsustainable, linear products in the next 6-7 years with sustainable circular products to solve the climate and create a liveable world. We believe that no organisation can achieve sustainability on their own and thus we answer the ‘Who’ that needs to be assembled to get climate and sustainability commitments done.
All images obtained as free resource from Wix.