From Disclosure to Action in Sustainability
From Disclosure to Action in Sustainability
Transparency and clarity in reporting not only increase investor confidence, but also strengthen corporate governance and help organisations effectively meet their sustainability commitments (ACCA, 2024).
Disclosure alone is not enough, but it is a good exercise for improving the monitoring and evaluation of operations and initiatives.
Sustainability should be seen as a long-term strategy that is deeply integrated into all business processes. According to ‘The Principles of Good Corporate Reporting,’ a principles-based and proportional approach is key to enabling companies to adapt to the changing needs of their stakeholders without creating an excessive reporting burden (ACCA, 2024). Companies must ensure that their actions are consistent with the principles of materiality and relevance and that the information provided is useful to investors and other stakeholders.
In this sense, disclosure standards help to guide questions, because to truly understand organisations, it is not enough to say ‘we believe in equality and do not discriminate’; the idea is to go further and establish policies to promote diversity of knowledge and experience, starting with the board of directors, setting clear goals and indicators that facilitate the monitoring and evaluation of strategies to achieve such equality.
Something similar happens with environmental indicators. It is no longer enough to publish that ‘we care about the environment’ or ‘we will reduce our carbon footprint.’ The idea is to be very clear about the “how” and the ‘when,’ and I would add to these a key question, the ‘where,’ because reducing emissions may be due to implementing more modern and efficient equipment or systems, achieving savings in fuel consumption for a certain operation, switching to another technology or energy source, improving maintenance so that you have fewer losses, better control of consumption and processes, or simply producing less, maintaining or even increasing the intensity of emissions per product, but you produced less and that was reflected in a lower net footprint.
Much better, safer and more efficient progress can be achieved when, with knowledge of the context and risks, strategic and structural actions are taken based on the right objectives and indicators.
Sustainability should not be understood as merely a regulatory obligation or a marketing tool, but rather as the result of a strategy that, when integrated into decision-making and at all levels of the organisation, transforms into opportunities for companies to improve their competitiveness, strengthen their resilience and build stronger relationships with their stakeholders.
By following the principles of good corporate reporting and adopting a comprehensive approach to sustainability, companies can create a solid strategy that will enable them to thrive in an uncertain future. To begin with, I recommend defining which efforts make sense and are truly sustainable, avoiding greenwashing, and taking advantage of opportunities such as:
- Access to green funds
- Optimisation of processes and resources
- Improvements in team training, efficiency and motivation
- Strengthening of the value chain
- Development of real competitive advantages
- Identification of current and future risks, their level of impact and probability
This also applies to countries. If Chile wants to attract sustainable, real, and permanent foreign investment, it must improve indicators such as the IDB's IGOPP. Governance, disaster preparedness, and transparency are necessary conditions for inspiring confidence and providing real opportunities for businesses to thrive and remain viable over time.
But all of this starts with a key exercise: identifying the financial risks derived from sustainability factors (ESG) and the impact risks of our operations (ultimately, how our operations positively or negatively affect people and the planet) in an exercise to define material issues, which will then be prioritised to facilitate the definition of a sustainable management strategy and the definition of goals and indicators.
With these exercises completed, and consideration given to how they may or will influence your business, who will be responsible for monitoring the implementation of the strategy and the different scenarios considered in it, you will be better positioned to explain to your investors, potential investors, financiers, and society in general how good a business it is to put their capital into your company. Transparency exercises on sustainability issues are nothing more than that: saying how seriously you are preparing for your company to remain and flourish over time. But how do you know what things are important to mention and explain? This is where you can rely on standards such as IFRS S1 and S2, locally NCG 461 + 519, SASB and GRI standards, and, in my opinion, the European standard with ESRS.
It is a challenging and changing landscape, dependent on many variables, and for this reason, a sustainability strategy cannot be generic or reactive; it must be built on a deep understanding of the business, its people, its environment, and its risks. This is why, as we have seen, growing companies and leaders are deciding to implement specific areas of sustainability. Although they rely on professional services such as ours, they are responsible for implementing and monitoring sustainability projects and strategies, and for raising ESG needs and risks with the risk committee, their own management teams, and even the board of directors. They are our counterparts, they know the business and where it wants to go, and above all, they are responsible for ensuring that sustainability permeates the entire organisation, putting the board's vision into practice.
Sustainability is not a compliance checklist, it is the result of a strategy to anticipate, adapt and thrive.