Just 47% of finance leaders and 53% of investors believe that corporate bodies will achieve their stated sustainability targets, according to a new report by EY.
The 2024 EY Global Corporate Reporting Survey, surveyed more than 2,000 finance leaders and 815 institutional investors globally about measures they are taking to ensure a more sustainable business environment.
‘Lagging behind’
‘This skepticism is reinforced by findings from the 2024 EY Global Climate Action Barometer, indicating that the quality of current disclosures fails to show that companies are undertaking substantial actions to combat climate change,’ EY said in its report.
‘Consequently, the pace of transition is lagging behind the necessary trajectory to achieve net zero by 2050 and fulfill the objectives of the 2015 Paris Agreement. This suggests that the original targets were probably over ambitious and lacked a plan to deliver.’
The study also found that more than half of finance leaders (55%) believe that internal sustainability reporting in their industry is at risk from being seen as ‘greenwashing‘.
This is backed by the findings of the EY Global Climate Action Barometer, which highlighted a fear of exposure to potential litigation from key stakeholders, including investors, as leading to a reluctance to give away too much information.
Due diligence
‘While disclosures are no doubt made in good faith, finance leaders clearly doubt that the necessary due diligence has been carried out. Given how quickly reporting and assurance requirements evolve, offering credible and verifiable disclosures could soon be non-negotiable,’ EY added.
The study emphasises three key priorities for finance leaders, including that CFOs need to develop strategies that prioritise long-term resilience and adaptability; the need to rebuild trust in sustainability reporting, with a focus on accurate, transparent, and substantiated disclosures; and the need to leverage advanced analytics, which can empower CFOs to integrate sustainability more effectively into financial decision-making. Read more here.
