How are companies moving the needle on sustainability reporting?
Companies with ambitious decarbonization goals are aiming for consistent, transparent data
As more companies commit to long-term targets for a net zero carbon future, the pressure is on to report progress to shareholders and the wider business world.
For many companies, it’s a developing area. At present, 50 percent of occupiers and 55 percent of investors are collecting data and reporting findings on a regular basis, according to JLL’s Decarbonizing the Built Environment report.
They’re playing catch-up with the leading pack who have already sharpened their focus on data and technology, using advanced analytics and automation – and in some cases real-time reporting.
Such technology has a critical role to play going forward to support the transparency needed to drive progress towards net zero goals, as well as meeting new environmental regulations.
“Sustainability is now recognized as a business risk with implications for organizations and supply chains,” says Cynthia Curtis, Senior Vice President of Sustainability Stakeholder Engagement at JLL. “The need for stronger, more transparent reporting is considerable, both for businesses to gauge progress and investors to identify opportunities.”
Foundations of strong reporting
Adopting a reporting framework such as the Global Reporting Initiative (GRI) is a common way for companies to establish goals, next steps, and methodologies for communicating their data. Around three-quarters of the world’s 250 biggest companies were using GRI at the end of 2020, according to KPMG.
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“These frameworks provide direction and support for companies that want reporting to show where continuous improvement is being made, but equally where the pain points are,” says Curtis. “At a time when greenwashing is still an issue, key stakeholders want to see consistency and rigour in the data.”
With many end goals set for 2030 and beyond, creating interim targets alongside annual reports helps companies sustain progress and demonstrate performance.
“Shorter-term measurements bring objectives into the here and now, and help people appreciate the urgency of these steps towards targets that may land in 2040 or 2050,” Curtis says.
Yet embedding sustainability reporting in everyday operations is a challenge – and one where bigger companies fare better than their smaller counterparts.
JLL found that corporates with more than 10,000 employees are leading the drive for better reporting, while investors with large real estate holdings tend to have stronger infrastructure for measuring sustainability.
“What sets such companies apart is the breadth and depth of their reporting, whether they disclose the implications that climate risk has for the business, and how it impacts their strategy going forward,” says Curtis.
For example, around 60 of the world’s 100 largest public companies support or report in line with the Task Force on Climate-Related Financial Disclosure (TCFD) framework, which recommends that companies not only report their performance but also disclose how they evaluate and manage climate risks and opportunities.
Culture of data
Technology is increasingly supporting corporate reporting capabilities. Tools such as sensors for waste, water and energy use can streamline data collection, while analytics platforms provide real-time insights to improve operations.
Yet underinvestment in data collection and analysis remains a critical issue – especially with reliance on data only set to grow.
“Accurate, consistent data collection is an issue for everyone,” says Curtis. “The biggest hurdle is committing time and resources into establishing data collection and monitoring processes and integrating these measurements into standard operations.”
Leading occupiers and investors recognise that enhanced data would offer greater opportunities for real-time analytics and improvement, says the JLL report. However, with just over a quarter of these businesses reporting fully integrated data processes, most organisations face a digital gap that will require significant future investment.
“AI is under-utilised and would help in measuring performance and benchmarking against like assets and standards,” adds Curtis.
New regulations could standardise sustainability reporting requirements, reducing the burden on corporates and helping investors compare organisations’ progress.
The G7 nations recently called for climate-related reporting to be compulsory, with the UK aiming to be the first European nation to make the TFCD framework compulsory. Five global framework providers, including the GRI, are collaborating to consolidate requirements into a set of universal reporting standards.
“Regulation is changing fast. That will speed up how organisations improve sustainability reporting,” says Curtis. “But it’s the market drivers that are accelerating change even more – sustainability-certified buildings have a higher occupancy rate, command higher rents, and are shown to improve occupant health and productivity.”
In the coming years, it means companies will become even more reliant on high-quality, consistent data.
“Smart companies know they have to invest in improving data collection and reporting,” says Curtis. “Sustainability is a long-term ambition and data informs an evolving roadmap, enabling organisations to take meaningful steps towards the ultimate goal of a net zero future.”