Leveling the Playing Field for Disclosures and Accurate Reporting
What’s new. New regulations in California (Climate Corporate Data Accountability Act – SB 253) and the EU (Corporate Sustainability Reporting Directive – CSRD) require certain public companies to report on climate risk disclosures and obtain third-party verification of ESG data. This includes the notoriously challenging Scope 3 emissions, which account for most of a company’s total emissions and often require complex supplier data.
Transparency is essential for companies of all sizes as they face increased accountability and pressure to decarbonize their supply chains.
Why it matters. This shift will not only hold large corporations to higher accountability standards but also increase pressure on smaller private suppliers to adopt similar practices. As companies across value chains are asked to demonstrate their sustainability efforts, the drive to decarbonize supply chains to meet climate targets will intensify and become unavoidable.
Go deeper. Establishing standards that require disclosure, along with accurate reporting, benefits both businesses and the principle of fair competition. These measures help reduce “greenwashing” and discourage false claims about environmental stewardship and sustainable practices with shareholders.
No more greenwashing. A November 2023 greenwashing research study showed:
68% of US executives admit their companies are guilty of greenwashing.
88% of Gen Z say they don't trust brands' environment, social, and governance (ESG) claims.
42% of corporate environmental claims made online are likely deceptive or false.
58% of global c-suite leaders admit to greenwashing.
Source: Zippia, November 2023
The takeaway. While many large, publicly traded companies have been using various ESG standards for some time, this directive is now setting a global precedent for verified, integrated reporting, influencing finance, sustainability, audit, and risk teams across sectors. Smaller and private companies should take notice and prepare.
The risk. As regulations evolve and transparency/disclosure requirements continue to accelerate, businesses of all sizes will be impacted. While the current focus is on large public companies, supplier companies are at risk and should prepare for verified disclosures to increasingly become the norm.
Take Action. Chiefly & Co.’s sustainability experts are here to help forward-looking enterprises accelerate readiness for ESG disclosures, navigate relevant and emerging regulations, and integrate transparency into their strategies for lasting impact.
The bottom line. Reliable ESG disclosures, when reported consistently within a framework and externally validated, create a level playing field for accurate comparison, benchmarking, and fair investment decisions.
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A FRESH APPROACH | Chiefly & Co.’s fractional experts accelerate sustainability & profitability for companies driven to do well while doing good. Learn more at chiefly-co.com
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