Stepping Up to Sustainability Reporting – 5 Things to Consider

Published date: January 12, 2024

The International Organization of Securities Commissions (IOSCO) has on 25 July 2023 jumped on the bandwagon to endorse the 2 sustainability disclosure standards issued by the International Sustainability Standards Board (ISSB) under the IFRS Foundation. With more than 20 countries having declared their commitment to adopt this reporting standard in their respective jurisdictions, it is a good start although the effective date as suggested by the ISSB will be pushed well beyond 2025.

In any case, starting to account for greenhouse gas emissions or any other sustainability metrics can be daunting for most companies. Hence, we should draw lessons from companies that have been reporting on sustainability data in a consistent manner over the past decade. Sustainability reports from computer manufacturer Hewlett Packard (HP), consumer good company Nestle SA and Malaysian property conglomerate Sunway Group have all been very well received by respected organizations that are pushing the global sustainability agenda such as the non-profit Carbon Disclosure Project (CDP) or CSR Malaysia publication which has been tracking the Sunway Group’s adoption of the United Nation’s sustainability development goals (SDGs).

Below are some of their advice for companies planning to start on their sustainability journey.

  1. Have Sustainability on Your Board’s Agenda

Sustainability reporting is a long-term endeavor. The right tone from the top is thus crucial. Getting the Board to have sustainability on the Board agenda will ensure the buy-in from the top leader of the company. These leaders are expected to provide the necessary guidance in managing stakeholder’s competing priorities and they will need to understand the necessity to invest time and resources for gathering of data, analyzing and reporting in due course. For Malaysia’s Sunway Group, a lot of the sustainability efforts are mainly driven from the Chairman’s office – especially in the early years.

  1. Assemble The Right Team

Sustainability is here to stay. Getting the right person with a long-term vision and commitment to drive and manage such a project is crucial. Appointing a guy who is looking forward to his retirement in the next 2 years to take charge of a net carbon project with a 2050 end date may have to be well thought through.

It is also unlikely for any company starting out in this area to have a competent in-house team at the onset. It needs to be built over time. Hence, it is perfectly acceptable to bring in outside help – in the form of sustainability consultants. With the right support, they can help to leapfrog a company forward in terms of their accounting and reporting process.

While the head of sustainability projects and reporting of HP and Sunway Group are both engineers, their departments do have teams of diverse talent consisting of data scientists, engineers and finance personnel to support the department’s work, build up over time.

  1. Leveraging on Technology

One consistent trait of these 3 conglomerates is their willingness to invest in automation of the data gathering processes with software and external services. HP has been using Schneider Electric to collect site-level monthly energy invoices for natural gas and electricity for most of its operating units, globally. Nestle uses its proprietary ERP systems with various reporting dashboards to manage the data collection across the sprawling organization. It is sensible to leverage technology in the laborious process of collecting and analyzing data – the companies can then be focusing on more critical areas such as improvement in energy usage or reducing industrial waste through implementation of sustainable manufacturing process.

Some sustainability tools are available free, online. Digital calculators, especially on Scope 3 emissions that use the GHG Protocol are now available on the web based on the standards currently in application. Companies are making use of these as a starting point for references and analysis to build up internal operating benchmarks for future decision making.

  1. Adopting the Right Framework

From the TCFD Framework on Climate Reporting to IIRC’s Integrated Reporting, from the Global Reporting Initiatives (GRI) to the UN’s SDGs, it is an alphabet soup out there. Choosing the right framework is thus critical. And, even if you have chosen the UN’s SDGs as your reporting framework, such as the Sunway Group, not all the 17 goals will have the same priorities – hence, the need to manage some of these in certain preferred order. Engagements with stakeholders, internal and external, are required so that the most appropriate framework (or components within a framework) can be identified and adopted with meaningful priorities.

When choosing a framework, do keep in mind that each of these is intended to address different stakeholders. For example, the IIRC framework is more targeted to capital providers and investors while the UN SDGs allows the information to be structured with a wider audience in mind.

Sustainability as a subject is extensive. Climate change remains the most mature in terms of reporting and disclosure. It is thus not surprising that of the 2 standards that were released in June by the ISSB, S2 deals with climate reporting. While calculating emissions may still be new to many businesses, it should be pointed out that the Greenhouse Gas Protocol (or GHG Protocol) has been in use since 2014.

Once a framework has been adopted, the next question is to sit down and map out the necessary targets and goals. It is important that these targets and goals are realistic to get everyone (sometimes, these can be external to the companies such as tenants or suppliers) to be committed to their achievement on a collective basis. Milestones and timelines should also be set to reflect their urgency.

  1. Role of the Finance Department, Reporting & Assurance

With its legacy experience in financial reporting, the finance department in many organizations is expected to also shape the non-financial reporting processes and controls while establishing effective governance of sustainability reporting.

In many companies, the finance department is also expected to translate the company’s goals and target into the most relevant metrics and disclosure while highlighting the clear link between financial and non-financial information. This can then provide a credible narrative to the stakeholders about the company’s sustainability journey – adequately measured and reported. This will reinforce the buy-in by stakeholders about the importance of the company’s adopted sustainability practices over time.

As an example, HP’s sustainability department worked with the finance team to make the case that customers want more environmentally friendly options. On its website, the company provides emission data for computers and its sustainability-linked sales rose to USD$3.5 billion in 2021, more than 10% of total worldwide sales.

When should companies start reporting their sustainability numbers externally? It is advisable that companies start reporting sustainability data internally first while fortifying their collating and reporting processes as they progress. Companies should not hastily report their sustainability numbers externally until they can scientifically back-up their methodology.

The rigor in collating and validating the information is very critical because of the many accusations of greenwashing by corporates in recent years. This will protect the company’s reputation as it builds up the internal reporting competency.

In fact, some regulators are advising companies to consider using the existing Internal Audit department (please ensure they know what they are doing), as a start, to help organize the paperwork, review the completeness of data and conduct the necessary validation of the reported numbers before they are to be publicized externally. Accounting firms can also help in the measurement and compilation process. Over time, it is expected that companies will be relatively confident in their reported data and will have already built up their in-house expertise in the reporting process. At this stage, this should be the right time to call in the external assurance provider.

To further drive confidence in the reported numbers, assurance by an independent professional is a logical next step. There are 2 levels of voluntary assurance currently being sought in the market – one being reasonable assurance (sometimes known as positive assurance) and the other, limited. While currently there aren’t many jurisdictions compelling an assurance to be conducted globally, it is expected to be an eventual trend in the future.


As more and more jurisdictions warm up to the adoption of S1 and S2 standards, it is important for companies to start taking the first step towards the disclosure of these sustainability information as required under the ISSB. This will include enhancing the governance and data management practices within an organization to ensure that the data collated is accurate and complete and is relevant for sustainability reporting purposes. From a regulatory compliance and value creation perspective, the integration of financial metrics with other non-financial disclosure across governance, risk management and strategy are likely to be the preferred way forward.


This article was first published in the Nov-Dec 2023 issue of the journal of the Institute of Cost & Management Accountants of Pakistan (ICMAP).