Sustainability: Taking Priority in Corporate Strategy and Reporting

BDO in the Boardroom

Key Takeaways:

• Sustainability is the “maturing” of ESG factors crossing over from government regulation to voluntary corporate reporting to becoming commonplace within organizations.

• Sustainability has moved across the threshold into mainstream global commerce as investors understand that issues of sustainability have financial implications and dictate risks/opportunities that companies have from a business point of view.

• Companies need to truly understand their shareholder base and be intentional in pursuing dialogue and engagement with investors – including not only institutional but also “activists” who often truly are speaking the language of business and are paying close attention to business issues impacting the company.

• It is much easier to be a start-up and focus immediately on sustainable strategy than reinvent core competencies based on trendlines, but that innovation is what is required of today’s boards (“how you deliver what you are good at in a different way”).

• Convergence of sustainability reporting standards will necessitate “integrated” reporting within financial statements and put pressure on the management to demand performance AND ensure the integrity of controls over the information provided to the market

• The tools to measure/manage sustainability issues have historically been poor – however, as enterprise resources platforms evolve to address accounting complexity and reporting standards converge to provide a common compliance language, this will drive broader accountability and better information for stakeholders.

• Next set of issues in focus: Human Capital vs. People Operations - However you choose to phrase, DEI, health/safety and labor conditions – companies need to focus on the employee engagement environments they are creating as these have a direct impact on business success.

• As corporate responsibility shifts from reputational risk to a business imperative there is significant scrutiny by investors and the regulatory community that is forcing communication within the company regarding needed changes in controls/ policies/ procedures to accommodate sustainability and financial disclosures fully into integrated reporting that need to be a timely area of focus for the board.

• Boards have responsibility for prioritization around what the company needs to “lean in on” – not a check the box, get an award, enhance my ratings play… this requires continual education that translates into deep thoughts on what is impacting my business to best drive strategy and value.

Access:

• Changing Business from the Inside Out: A Treehugger's Guide to Working in Corporations

• Persefoni – Climate Management Accounting Platform

• BDO’s ESG Center of Excellence