Why company boards should act now on sustainability reporting

Boards of Directors need to act now to meet regulatory requirements for clear financial reporting of sustainability-related information, says a World Economic Forum (WEF) article co-authored by Dr Simon Learmount of Cambridge Judge Business School.

“Sustainability – including, critically, climate change – has rapidly evolved from an ‘environmental, non-financial’ consideration to a set of issues that often present material financial risks and opportunities for business”, says the article. 

The article is co-authored by Sarah Barker, Managing Director of climate change investment and advisory firm Pollination, and Simon Learmount, Associate Professor in Corporate Governance at Cambridge Judge, who are co-chairs of the WEF’s Community of Climate Governance Experts. 

Why information on sustainability should be considered mandatory 

The article says there are 3 key reasons why acting on new frameworks on sustainability reporting should be considered as effectively mandatory for companies: 

1. the speed and scale of regulatory change
2. directors’ duties and liability exposure
3. a firm’s competitive position in light of stakeholders’ increasing expectation of more information about climate-related risks and opportunities

As a result, boards need to assess their firms’ capacity and governance to meet these obligations, the gap between the firm’s current reporting and fast-emerging reporting requirements, and the implications of these requirements on company strategy.