Input Stories

Most companies lack the technology they need to meet coming sustainability reporting requirements (The Wall Street Journal, subscription).

What’s going on: “Just 24% of companies say that they are ready for future reporting needs, the survey from consulting firm Bain & Co. found.”

• The poll of 300 business leaders in sustainability and technology in the U.S., Europe and Asia found that more than 88% of the firms represented would require better tech, such as data-collection platforms, to meet goals.

Why it’s important: New climate reporting requirements from the Securities and Exchange Commission, California and the European Union will increase scrutiny on companies’ emissions-reporting practices. These new regimes could require “financial accounting-level rigor,” leading companies to adopt “more sophisticated data-gathering and analysis techniques.”

Our advocacy: The NAM has highlighted the steep compliance difficulties associated with mandatory emissions reporting. Thanks in large part to the NAM’s advocacy:

• The SEC’s final rule excluded a proposed Scope 3 emissions reporting requirement;
• The implementation dates for the rule’s Scope 1 and Scope 2 emissions reporting requirement are delayed until FY 2026 for large companies and FY 2028 for midsize companies;
• The emissions audit requirements are further delayed, with the most stringent standards taking effect as late as FY 2033; and
• Small and newly public businesses are exempt from any emissions reporting obligations.

Sustainability goals: “About three-quarters of respondents reported that sustainability and ESG metrics are embedded into incentives in the C-suite and, in some cases, at all levels of management.”

• Manufacturers are leading efforts to enhance sustainable business practices and combat climate change. But mandatory emissions reporting will mean “moving away from calculations based on assumptions and industry averages” and toward a more prescriptive approach to disclosure.
• That’s why “most survey respondents said they anticipated needing technological upgrades to realize their goals.”