In your opinion, will the addition of mandatory sustainability reporting according to the European Sustainability Reporting Standards (ESRS) to company and corporate reporting motivate business entities to scale up their sustainability goals?
In your opinion, will the introduction of mandatory enhanced disclosure of sustainability issues help to scale up the implementation of sustainability goals and accelerate the processes of transforming the economy towards a sustainable, green circular economy?
Taking into account the negative aspects of the unsustainable development of the economy, including the over-consumption of natural resources, the increasing scale of environmental pollution, the still high greenhouse gas emissions, the progressing process of global warming, the intensifying negative effects of the climate change taking place, etc., it is necessary to accelerate the processes of carrying out the pro-environmental and pro-climate transformation of the classic growth, brown, linear economy of excess into a sustainable, green, zero-carbon growth and closed loop economy. One of the key determinants for achieving the aforementioned green transformation of the economy is also the implementation of the Sustainable Development Goals, i.e. according to the UN standard 17 Sustainable Development Goals. In recent years, many companies and enterprises, noticing the growing importance of this issue, including the increasing scale of pro-environmental and pro-climate awareness of citizens, i.e. customers of their offers of companies and enterprises, add to their missions and development strategies the issues of implementation of sustainable development goals and present themselves and their offers of products and services within advertising campaigns and other forms of marketing communication as green, implementing specific sustainable development goals, environmentally and climate friendly, etc. Unfortunately, this is always in accordance with the fact that the implementation of the sustainable development goals is not a fact. Unfortunately, this is not always consistent with the facts. Research shows that in the European Union, the majority of existing companies and enterprises already carry out this type of marketing communication to a greater or lesser extent. However, a significant proportion of businesses that present themselves as green, pursuing specific sustainability goals, environmentally and climate-friendly, and that present their product and service offerings as green, made exclusively from natural raw materials, and produced fully in line with sustainability goals, are doing so unreliably and misleading potential customers. Many companies and businesses are greenwashing. It is therefore necessary to improve systems for verifying what economic operators present about themselves and their offerings in their marketing communications against the facts. By significantly reducing the scale of greenwashing used by many companies, it will be possible to increase the effectiveness of carrying out the process of green transformation of the economy and really increase the scale of achieving the Sustainable Development Goals. Significant instruments to motivate business operators to conduct marketing communications in a reliable way also include extending the scope of business operators' reporting to include sustainability issues. The addition of sustainability reporting obligations for companies and businesses in line with the European Sustainability Reporting Standards (ESRS) should motivate economic actors to scale up their implementation of the Sustainable Development Goals. In November 2022, the Council of the European Union finally approved the Corporate Sustainability Reporting Directive (CSRD). The Directive requires companies to report on sustainability in accordance with the European Sustainability Reporting Standards (ESRS). This means that under the Directive, more than 3,500 companies in Poland will have to disclose sustainability data. The ESRS standards developed by EFRAG (European Financial Reporting Advisory Group) have been submitted to the European Commission and we are currently waiting for their final form in the form of delegated acts. However, this does not mean that companies should not already be looking at the new obligations. Especially if they have not reported on sustainability issues so far, or have done so to a limited extent. Companies will have to disclose sustainability issues in accordance with ESRS standards. It is therefore essential to build systemic reporting standards for business entities enriched with sustainability issues. In a situation where the addition of sustainability reporting obligations in accordance with the European Sustainability Reporting Standards (ESRS) to company and corporate reporting is effectively carried out, there should be an increased incentive for business entities to scale up their sustainability goals. In this regard, the introduction of enhanced disclosure of sustainability issues should help to increase the scale of implementation of the sustainable development goals and accelerate the processes of transformation of the economy towards a sustainable green circular economy.
In view of the above, I would like to address the following question to the esteemed community of scientists and researchers:
In your opinion, will the introduction of mandatory enhanced disclosure of sustainability issues help to scale up the implementation of the Sustainable Development Goals and accelerate the processes of transformation of the economy towards a sustainable, green circular economy?
In your opinion, will the addition of mandatory sustainability reporting to companies and businesses in line with the European Sustainability Reporting Standards (ESRS) motivate business entities to scale up the implementation of the Sustainable Development Goals?
Will the extension of sustainability reporting by business entities motivate companies to scale up their sustainability goals?
What challenges do companies and businesses face in relation to the obligation for expanded disclosure of sustainability issues?
What do you think about it?
What is your opinion on this subject?
Please respond,
I invite you all to discuss,
Thank you very much,
Counting on your opinions, on getting to know your personal opinion, on an honest approach to discussing scientific issues and not the ready-made answers generated in ChatGPT, I deliberately used the phrase "in your opinion" in the question.
The above text is entirely my own work written by me on the basis of my research.
I have not used other sources or automatic text generation systems such as ChatGPT in writing this text.
Copyright by Dariusz Prokopowicz
Best wishes,
Dariusz Prokopowicz
Dariusz Prokopowicz I think there is a balance to be struck when it comes to mandatory reporting. On the one hand the goals are really important particularly for some businesses that have a major impact on the environment.
For many businesses which do not have a major impact on sustainability, they should not be forced into extra work and costs. The level of awareness of the problem is increasing and businesses should be trusted to exercise judgment taking all factors into consideration.
Governments have the primary responsibility for this and they should and are taking initiatives in this direction.
Richard
Companies will also weigh the cost and benefits of sustainability reporting.
I think, the question posed is straight forward and emerging research is showing a positive effect of sustainability reporting on companies forward looking policies with respect to scaling up of sustainability practices, including allocation of resources for enhanced coverage of SDGs in their social and environmental activities.
Some perspectives of this discussion from Norway-Russia Arctic petroleum:
1. https://doi.org/10.17585/arctic.v7.418
2. https://doi.org/10.1016/j.erss.2016.03.008
3. https://doi.org/10.1108/SRJ-10-2015-0150
Expanding the scope of reporting by business entities to include sustainability issues can motivate companies to scale up their sustainability goals. It can help companies identify areas where they need to improve their sustainability performance and set targets for improvement. It can also help companies communicate their sustainability performance to stakeholders and build trust with them.
Dear Dariusz,
In our system today, the main business incentive is financial (shareholder wealth) and any other influences have to tie in to finance in some way, either through increasing costs that a company would wish to avoid (from lawsuits, negative publicity that could depress sales, costs of complying with regulatory laws, etc.) or increased sales by tapping into a market that values a company's position with regard to sustainability. So, IF this reporting is tied to wide dissemination of the information in ways that influences customers, and IF the reports can be used by the public to launch lawsuits against companies or are linked to public prosecutions, THEN and only then will the reporting make a difference. Otherwise it is simply window dressing by companies and government officials working together to avoid real change in enforceable laws by claiming some change. You can see from my work that I have created a number of new accountability indicators and have worked to link them to new NGOs that can use the measures for public enforcement through laws. I have also worked on promoting citizen mechanisms for new lawsuits that can enforce laws and legal principles by expanding laws, either through citizen enforcement (e.g. private attorney general mechanisms, class action suits) or civil law suits for torts (pollution/nuisance, rights infringements). [You can find my pieces with references: "Why We Need a Donor Monitor"; "A Return to Democracy/ The New Federalist Amendments", 'Is Economics in Violation of International Law?", 'A Treatise on International Develpment Law"] The economic term you might search to demonstrate that reporting alone is a diversion and has no impact ("moral suasion") should convince you that the small percentage of those who are already motivated by good behavior may act to follow higher standards when they know them to improve their already good behaviors, but that the others will not be influenced. Sometimes, also, the reporting is used to focus on issues that are not really the key to solutions and are also diversions, such as how the SDGs are used by the UN in the name of "sustainability" but in a way that actually evades sustainability. [You can look for my piece on the SDGs and how this happens.]
David Lempert, Ph.D., J.D., M.B.A., E.D. (Hon.)
David Lempert Agree with you on the suggestions and arguments made.. it may be also important to consider sustainability efforts of the companies be made mandatory than leaving it to be voluntary or to be determined based on market pressures.. For instance, India has made the CSR spending as a mandatory activity ever since 2013, following the enuncialtion of the Companies Act 2013.
Expanding the scope of reporting by business entities to include sustainability issues can motivate companies to scale up their sustainability goals in a few ways.
First, it can help to increase transparency and accountability. When companies are required to report on their sustainability performance, it makes it easier for investors, customers, and other stakeholders to hold them accountable for their actions. This can create a pressure on companies to improve their sustainability performance, as they know that their actions will be scrutinized.
Second, it can help to identify opportunities for improvement. When companies are required to report on their sustainability performance, it forces them to take a close look at their operations and identify areas where they can improve. This can lead to the development of new sustainability initiatives and the implementation of new practices that can help to improve the company's environmental and social performance.
Third, it can help to attract new customers and investors. In today's market, more and more consumers and investors are looking to invest in companies that are committed to sustainability. By expanding the scope of reporting to include sustainability issues, companies can make it easier for these stakeholders to identify companies that align with their values. This can lead to increased sales and investment, which can help to support the company's sustainability goals.
Overall, expanding the scope of reporting by business entities to include sustainability issues can be a powerful tool for motivating companies to scale up their sustainability goals. By increasing transparency and accountability, identifying opportunities for improvement, and attracting new customers and investors, this type of reporting can help to create a more sustainable world.
Here are some examples of how companies have scaled up their sustainability goals in response to expanded reporting requirements:
- In 2019, the European Union adopted a new directive requiring large companies to report on their sustainability performance. In response, many companies have set new sustainability goals, such as reducing their greenhouse gas emissions or increasing their use of renewable energy.
- In 2020, the Securities and Exchange Commission (SEC) proposed new rules requiring public companies to disclose their climate-related risks and opportunities. In response, many companies have begun to develop new sustainability plans and initiatives.
- In 2021, the World Economic Forum released a report calling for a new global standard for sustainability reporting. The report was endorsed by over 100 companies and organizations, and it is expected to lead to a wave of new sustainability reporting initiatives.
These are just a few examples of how expanded reporting requirements can motivate companies to scale up their sustainability goals. As the demand for sustainability information continues to grow, we can expect to see even more companies taking steps to improve their sustainability performance.
Dear Prof. Prokopowicz!
You raised a very important topic to address. May I kindly argue at this stage one cannot really say what future scenario will be the actual one. Predictions are difficult to present based on historical data as the business environment in Europe is about to become increasingly turbulent due to the war in Ukraine and global competition between the EU and China on the one hand and the USA on the other. Hoping for the best, but still preparing for the worst:
1) Greenwashing in Corporate Sustainability Reporting: Towards Successful Environmental Sustainability Management (2023): https://link.springer.com/collections/gjgafbdgdi
2) Hahn, R., Reimsbach, D., & Wickert, C. (2023). Nonfinancial Reporting and Real Sustainable Change: Relationship Status—It’s Complicated. Organization & Environment, 36(1), 3–16, https://doi.org/10.1177/10860266231151653, Open access: Article Nonfinancial Reporting and Real Sustainable Change: Relation...
Yours sincerely, Bulcsu Szekely
- Badges
- Science topic
- Similar topics
- Indexes