There is a pressing need to standardize ESG reporting globally, to ensure that stakeholders have meaningful yardsticks to assess the sustainability performance of various companies. While many countries, including several in Asia Pacific, have chosen to adopt Global Reporting Initiative’s standards (GRI) and the Task Force on Climate-Related Financial Disclosures (TCFD) framework as the basis for ESG reporting regulations, there remains a host of other reporting standards and frameworks to be adopted by many jurisdictions.

At the 2nd annual Sustainability Week Asia, organized by Economist Impact, more than 1,500 business leaders, entrepreneurs, policymakers, and researchers from across Asia Pacific came together to discuss ways to scale, innovate and transform sustainability initiatives. I was joined by Vinamra Srivastava, Chief Sustainability Officer at CapitaLand Investment and Dr. Allinnettes Go Adigue, Head of the ASEAN Regional Hub at Global Reporting Initiative, on a panel session at the event on “Harmonizing Reporting Standards for a More Sustainable Business”. The discussions, led by Sumana Rajarethnam, Director, Economist Intelligence Corporate Network South-East Asia, focused on the challenges and possible solutions around standardizing sustainability reporting in the region. Our discussion was a testament to how integral sustainable business practices have become for companies today, and yet how much longer the journey ahead is.

ESG and Sustainability Reporting: Rigor in data collection

Given the transglobal nature of business, the assessment of sustainability performance of companies across the region remains chaotic and much coordination at the international level still needs to happen to streamline and simplify reporting requirements.

Concurrently, companies should focus on the fundamentals of sustainability reporting — ensuring data is reliably gathered and thoughtfully presented; and having clarity about metrics which are common across various reporting standards, to develop better adherence over time. These best practices hold true regardless of whichever reporting framework a company abides by.

Gathering and creating investment-grade sustainability data is important because investors still focus on materiality. While there is a growing sense among business leaders that sustainability reporting is vital, most still perceive it as separate, perhaps even detracting from, the bottom line. However, responsible sustainability reporting can and does have a significant impact on profitability.

Reframing beyond mere reporting

There is a pressing need for companies to recognize that merely reporting data is not enough. Fundamentally, the way we do business will need to change to keep up with the way the world around us is changing. The issues around sustainability reporting need to be reframed, and companies should consider shifting from capitalist, or commercial goals, to goals which promote and ultimately ensure sustainable development.

One of the questions raised during our panel session was why there was no requirement for public health data to be in ESG reporting, given that companies can and do have a tangible impact on the physical wellbeing of society at large. A valid point indeed: there should be absolute consideration in that regard, and more companies should integrate public health issues into their business strategy.

Recalibrating first principles: helping businesses discover true value

I’ve been on a twenty-year journey with Corporate Social Responsibility and ESG. The panel highlighted for me not just the need to take the long-term view, but to also see the necessary alignment of sustainability reporting standards as an ongoing process of recalibrating first principles.

Businesses can no longer simply look at profit and loss or earnings per share. Accountability in business planning and financial practices, with a clear view towards intentionally identifying emissions as consumption costs and business expenses, must be ingrained in a company’s ethos. Identifying true value is imperative.

And yet, as our panel noted, the finely differentiated issues plaguing sustainability reporting across jurisdictions create inconsistencies at the global, regional and national levels, and firms of all sizes which have a transnational presence continue to struggle.

ESG and Sustainability Reporting: Start at the top

While ESG is top of mind for many businesses today, tone at the top is critical. What really matters is the practical actions companies are taking to integrate ESG into their governance agenda. Is it regularly and intentionally prioritized during board meetings? Is there oversight at the board level for ESG initiatives across the company? Is there an effort to systematize and routinize internal ESG monitoring? Is the C-suite compensation scheme tied to ESG performance? A clear commitment to operationalize ESG from the highest levels in an organization will make it happen.

Guest Author: Niven Huang is head of ESG, KPMG Asia Pacific. Read more KPMG blogs here. Read all guest blogs here. More: Read all guest blogs here.