Sustainability as an essential part of corporate governance
While sustainability was barely on the radar for most companies a decade ago, it’s now firmly established as a corporate issue. Whether as part of their own ethos or because donors and customers are showing an increased interest in sustainability transformation, nearly all companies have a section on their website dedicated to reporting on their own sustainability efforts. In larger companies, there’s usually a permanent role with the sole remit of managing sustainability goals, and marketing campaigns are also increasingly focusing on this issue. The results of the GHD Sustainability Monitor 2023 global survey confirm this trend. 59% of those surveyed said that sustainability is central and fully integrated in their organisation’s vision and strategy, while 36% said it is central, but not yet fully integrated. 5% admitted that it is central, but ‘evolving’. No executive said the topic is not at all central to their organisation. Further responses to the survey also illustrate the importance of sustainability: For 29% of companies surveyed, responsibility for sustainability lies with the CEO and for 16% with the board of directors. 62% of respondents had set sustainability targets in line with compliance requirements, with 28% having also set additional targets. Only 10% reported having set no targets at all.
New regulatory requirements expected in 2024
The UK already has some of the world's most advanced corporate and investor sustainability laws and reporting requirements. In addition to these, the UK Sustainability Disclosure Standards (SDS), a package of measures aimed at reducing greenwashing and unifying UK sustainability reporting, are expected to be introduced in 2024. These measures include sustainable investment labels, disclosure requirements, and restrictions on the use of sustainability-related terms in product naming and marketing. Exactly what these standards will look like is as yet unclear, but they’re expected to be based on the IFRS Sustainability Disclosure Standards, created in 2022 by the International Sustainability Standards Board (ISSB). It’s anticipated that they will become the definitive UK sustainability reporting standards. The new reporting standards may also require businesses to disclose their alignment with the UK Green Taxonomy, currently being developed by the UK government.
Reporting against the taxonomy, which will set out the criteria that specific economic activities must meet to qualify as being ‘green’, will be voluntary for at least two years, after which the government will explore mandatory reporting requirements. Although much of this legislation is being phased in over several years, businesses can prepare by identifying the changes they will need to make and being ready to disclose in line with voluntary initiatives.
Sustainability objectives in 2024: the impact of global crises
Given the financial burden of inflation and rising energy prices, sustainability could become a lower priority for businesses in 2024. Consumers are already noticeably less willing to pay increased prices to support sustainability initiatives.
In times of crisis, many companies feel that compliance with sustainability requirements puts them under additional pressure. Supply chain bottlenecks are one of the major issues standing in the way of meeting sustainability goals. A poll carried out for TetraPak in 2023 revealed that only 24% of food and drink manufacturers in the UK still believe sustainability should be their top priority. Shortage of raw materials and price increases remain two of the biggest supply chain challenges facing businesses today. While businesses are aware of the implications of pursuing a sustainability strategy, 70% of producers and manufacturers admitted that other issues take priority.
However, many companies demonstrate continued commitment to sustainability and have set ambitious sustainability goals for 2024. Here are a few examples from Sustainability Magazine’s Top 100 Companies review:
- AstraZeneca: The pharmaceutical and biotechnology giant achieved 59.3% reduction in Scope 1 and 2 greenhouse gas emissions between 2015 and 2022. Its Green Labs initiative demonstrates a commitment to sustainable science by engaging scientists in environmental sustainability across the organisation to take action on issues including energy reduction, waste management and innovation in laboratory processes.
- HSBC: The UK-based global financial services institution has joined with the World Resources Institute and the World Wildlife Fund to form a five-year partnership. It’s also engaged in several climate partnerships within the UK, including a project with the National Trust to create carbon-rich habitats and a partnership with Imperial College London and the University of Birmingham to help UK start-ups to develop services or technologies with potential for impact on climate change.
- PwC: In 2020, professional services company PwC made a worldwide commitment to achieve net zero greenhouse gas emissions, with its 2030 near-term goals validated by the Science Based Target initiative. Its global Centre for Nature Positive Business brings together over 500 nature specialists from across the company’s network, combining their knowledge to help accelerate the transition to a net zero future.