ESG Comms In Retreat Even As Sustainability Reporting Increases: Report

(MENAFN- PRovoke) NEW YORK -
Companies may be trying to draw attention away from their ESG efforts despite increasing sustainability activity as a whole, a report by Teneo has found.

The 'State of U.S. Sustainability' report, which examines 250 sustainability reports from S&P 500 companies, finds that sustainability reporting is being shaped by two major trends. The first of these is increasing regulatory requirements for more ESG disclosure, while the second sees opposing pressure on companies to abandon ESG altogether. These trends are forcing corporates to rethink how they manage their ESG strategies.

Earlier this year, for example, Harley-Davidson
dropped its DEI policies following targeted consumer backlash from conservative activist Robby Starbuck, amid broader political pressure in the US.

The report identifies a number of significant trends in terms of ESG reporting from US companies in 2024:

The end of ESG:
ESG as an acronym is far less evident across report titles, with only 24% of reports using the term. This is down from 35% in 2022 and 31% in 2023. Instead of ESG, sustainability and impact are being used more frequently, up to 39% and 10% respectively, from 33% and 6% in 2023.

CEOs step up: CEOs are now taking more responsibility for ESG policies. 65% of reports were signed by the CEO alone, and in 32% of cases, the CEO holds primary oversight of ESG efforts, with chief sustainability officer in second place at 18%.

Greenhushing:
Press releases and summaries of ESG reports have also decreased across the board. Only 49% of reports came with a press release in 2024, down from 76% in 2021. Likewise only 14% of reports came with a summary, down from 26% in 2021. To counteract this, companies have begun launching microsites to accompany their reports within their websites. Only 27% of reports had these in 2022, this number now sits at 95%.

Disclosure ready:
The majority of reports include the GRI, SASB, TCFD and UNSDG disclosure frameworks. The EU Corporate Sustainability Reporting Directive (CSRD) and IFRS Sustainability frameworks were cited for the first time in 2024, with 13% of companies mentioning the former and 5% the latter.
The EU CSRD framework is required among non-EU companies earning more than €150M; they must first include the framework in their 2025 reports, with companies beginning to prepare now.

Changing goals, stationary goalposts:
Only 36% of reports included an ESG goal progress section, down from 46% in 2023. 8% of reports said that their goals had not met targets and only 4% repositioned their goals.

External assurance holds steady: 62% of companies used external assurance, evaluating performance data used within sustainability reports, to validate at least one data point in 2024. However, the rate at which companies sourced both social and environmental data increased from 22% to 32%. In terms of which companies are used for external assurance, Apex proved the most popular within 2024 reports.

Say hi to AI: AI also made its first appearance in the 2024 reports, with 22% of companies mentioning it at some point in their reporting. In terms of which industries were mentioning the new technology, healthcare, IT and financial services took the top spots.

Long reads become longer: Reports are becoming longer, increasing to an average of 83 pages. This is only a single page increase from 2023, but a wider sample sees the page average rise from 70 pages in 2021.

Overall, the report signals the changing ways companies are having to approach ESG amid competing sources of pressure. While there is evidence of stronger ESG activity among companies, resulting in longer reports with more data points and increased CEO input, companies have opted to quieten publicity surrounding reports and bring less attention to them.

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