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Sustainability now: Where sustainability and strategy meet · PwC's accounting podcast

• 0:00
  SPEAKER_03: Thought Leadership from PWC's National Office.
• 0:09
  SPEAKER_01: Hello, I'm Diana Stoltzfus, filling in as host for Heather Horn today, and welcome back to PWC's Accounting Podcast.
• 0:18
  SPEAKER_01: This is Sustainability Now.
• 0:20
  SPEAKER_01: I'm especially excited for our episodes today because we're coming to you from New York Climate Week, where sustainability reporting and innovation are front and center.
• 0:30
  SPEAKER_01: With me today is Nadia Picard, PWC's global reporting leader, who has been leading this work and bringing insights directly from the conversations taking place here in New York.
• 0:40
  SPEAKER_01: Against this backdrop, we'll be diving into the PWC findings of PwC's new Global Sustainability Reporting Survey, which captures perspectives from nearly 500 executives around the world.
• 0:53
  SPEAKER_01: Before we get started, just a quick note.
• 0:55
  SPEAKER_01: If you'd like to watch this video of this conversation, you'll find a link in our show notes.
• 1:00
  SPEAKER_01: Plus, for more on the Global Sustainability Reporting Survey, check out the publication also linked there.
• 1:06
  SPEAKER_01: Well, Nadia, it's so great to have you here with me and have you here at Climate Week.
• 1:10
  SPEAKER_01: I know you've been going to a lot of meetings, meeting with a lot of different stakeholders.
• 1:15
  SPEAKER_01: It would be great just to hear what are you hearing in your meetings?
• 1:19
  SPEAKER_01: What perspectives have you gathered to date?
• 1:21
  SPEAKER_02: Yeah, thank you, Diana.
• 1:23
  SPEAKER_02: And it's it's just really one day, really, so it's a bit fresh early.
• 1:27
  SPEAKER_02: But that there's three items that are really already take away from Climate Week.
• 1:32
  SPEAKER_02: Number one is sustainability reporting as such, is almost taken for granted.
• 1:37
  SPEAKER_02: And we're not talking about making it better.
• 1:40
  SPEAKER_02: And really, we're talking about making the data used for business purposes.
• 1:46
  SPEAKER_02: And that resonates well with the results of the survey that we will get into in a little bit, I guess.
• 1:52
  SPEAKER_02: Um, item number two, very well linked to that, is there is still talk about the business case for sustainability.
• 2:02
  SPEAKER_02: And I almost couldn't believe it, but it's quite different from how it was discussed before.
• 2:09
  SPEAKER_02: Before we discussed it as does business have a role in solving sustainability issues that we face in this world?
• 2:16
  SPEAKER_02: That has been answered.
• 2:17
  SPEAKER_02: And when we talk about the business case for sustainability now, it's really much more about taking it into one company's business, business model, business processes, and business strategy, um, using the data from sustainability reporting.
• 2:33
  SPEAKER_02: So, and that is being discussed around climate action, about nature, and and other items here at Climate Week.
• 2:40
  SPEAKER_02: And the third item, and that is a bit of a new quality, um, is a realization that I think stems from sustainability reporting requiring companies looking up and down their value chain.
• 2:55
  SPEAKER_02: Right.
• 2:56
  SPEAKER_02: And that is a realization that businesses can't go it alone.
• 3:00
  SPEAKER_02: One business can't go it alone.
• 3:02
  SPEAKER_02: They do need to collaborate across sectors within their value chain to get on with things, whether that is reporting or actual action.
• 3:10
  SPEAKER_02: Right.
• 3:11
  SPEAKER_02: And one of the quotes that I really like very much is collaboration is the new competition.
• 3:17
  SPEAKER_02: Oh, I love that.
• 3:18
  SPEAKER_02: That is something that we need to sit on and reflect on a little bit.
• 3:22
  SPEAKER_02: But I think that's very true and also resonates with some of the thinking that we have put out as PWC.
• 3:27
  SPEAKER_01: That's really interesting.
• 3:28
  SPEAKER_01: I mean, I think that link in and having that come through between the strategy and what you're hearing and what the reporting is going on in sustainability is so critical for why this reporting is really important.
• 3:39
  SPEAKER_01: So maybe we'll jump into the survey, Nadia.
• 3:41
  SPEAKER_01: So we just released or PWC just released the global sustainability reporting survey, which you've been leading.
• 3:47
  SPEAKER_01: Maybe you can talk us through what the survey set out to explore and why this is an important moment to take a step back.
• 3:55
  SPEAKER_02: So the survey, um, as you already mentioned, we surveyed um nearly 500 executives around from companies that are either planning to report or already have reported under either ISSB or CSID.
• 4:12
  SPEAKER_02: So that's why it's no longer a CSID survey or an ISSP survey.
• 4:17
  SPEAKER_02: It's actually a sustainability reporting survey because some also are reporting under DRI or other frameworks.
• 4:24
  SPEAKER_02: Sure.
• 4:25
  SPEAKER_02: So um, and we're asking people about their experience and what would they have done differently with the experience that they have now.
• 4:34
  SPEAKER_02: Obviously, that then derives some good tips and tricks for companies that have not yet reported and how that reporting actually worked for them.
• 4:42
  SPEAKER_02: So that is really the the gist of the survey.
• 4:45
  SPEAKER_01: Yeah, and it might be important, Nadia, to take a step back here before we jump into the results of the survey, too.
• 4:50
  SPEAKER_01: You mentioned CSRD.
• 4:51
  SPEAKER_01: We know there's a lot going on with the omnibus proposal and really with sustainability reporting regulations around the globe.
• 4:59
  SPEAKER_01: Maybe you can just give us an overview of what the landscape looks like right now.
• 5:04
  SPEAKER_02: So um ISSB is continuously being adopted by territories, right?
• 5:11
  SPEAKER_02: And even where some territories might, or territories, countries, right, um might have paused on the actual effective dates of that implementation.
• 5:22
  SPEAKER_02: For example, Singapore has pulled back a little bit.
• 5:25
  SPEAKER_02: There are more and more countries coming onto the ISSB agenda.
• 5:30
  SPEAKER_02: So sustainability reporting is on the rise from that perspective.
• 5:33
  SPEAKER_02: I think it's about 40 countries right now.
• 5:37
  SPEAKER_02: Wow.
• 5:37
  SPEAKER_02: CSID reporting, um, everybody talks about omnibus and its effects, right?
• 5:42
  SPEAKER_02: Um, so some companies have already reported the big companies, the Wave One companies.
• 5:48
  SPEAKER_02: Now everybody is looking at what does omnibus really mean?
• 5:51
  SPEAKER_02: But the report, the survey, actually shows that companies predominantly say more than half really say that the external or internal pressure to get on with sustainability reporting has increased.
• 6:07
  SPEAKER_02: Wow.
• 6:08
  SPEAKER_02: Right?
• 6:08
  SPEAKER_02: So, what does that mean, right?
• 6:10
  SPEAKER_02: External pressure, obviously, stakeholders from investors through customers, through suppliers, um, employees, civil society, NGOs, and regulators, they all keep asking questions around that, um, around that sustainability reporting, of course.
• 6:28
  SPEAKER_02: And then the internal pressure to get on with sustainability reporting, that I find really interesting.
• 6:34
  SPEAKER_02: Um because that means that companies are starting to really use the data for business purposes.
• 6:42
  SPEAKER_02: And that I find really, really just great.
• 6:46
  SPEAKER_02: Right.
• 6:47
  SPEAKER_02: Because that is what all of this is about.
• 6:49
  SPEAKER_01: Right, right.
• 6:50
  SPEAKER_01: Okay, well, I think that that's a really helpful overview of the landscape and a good overview as we head into the results of the survey.
• 6:59
  SPEAKER_01: So I you touched on this a little bit around companies, and it sounds like they're not slowing down.
• 7:04
  SPEAKER_01: They're not changing their approach.
• 7:06
  SPEAKER_01: But maybe you can explore that a little bit more.
• 7:09
  SPEAKER_02: Yeah, so um they are not slowing down in that they are embedding sustainability reporting more into how they do it, right?
• 7:19
  SPEAKER_02: Um we've run companies or those companies that are taking advantage of the pause of actually having to go out with it.
• 7:28
  SPEAKER_02: They are um looking more at how technology can help them, right?
• 7:33
  SPEAKER_02: So um we're seeing a slight move away from spreadsheets, although they are still around, right?
• 7:38
  SPEAKER_02: And they always will be around because there is certain one-of-information where it doesn't make sense to really use a system or anything like that.
• 7:46
  SPEAKER_02: But we see the increased use of um of carbon accounting software um around uh disclosure management software, of just just collecting and evaluating the data, right?
• 8:00
  SPEAKER_02: And then um, I can't believe we're into the podcast for so many minutes and haven't said artificial intelligence yet.
• 8:07
  SPEAKER_02: I will bring it in right now.
• 8:08
  SPEAKER_02: That's also the talk of the town here, right?
• 8:11
  SPEAKER_02: Right.
• 8:11
  SPEAKER_02: New York Climate Week.
• 8:12
  SPEAKER_02: But um, so where am I going with this?
• 8:16
  SPEAKER_02: Some companies that haven't really employed technology just yet might be at the advantage of using AI for data collection, for report writing, and so on without having to worry about legacy systems.
• 8:31
  SPEAKER_02: So it's um it's good to see that.
• 8:34
  SPEAKER_01: Yeah, it's interesting that you get an advantage by not having adapted technology, so then you can leapfrog somewhat to the more advanced technologies.
• 8:42
  SPEAKER_01: So you've talked a lot about not just regulators being interested, but investors, customers, employees, a number of these different stakeholders, and that companies are feeling a lot of pressure from this.
• 8:53
  SPEAKER_01: How is that shaping their reporting strategy?
• 8:58
  SPEAKER_02: Yeah, it's um coming back also to your question number one, right?
• 9:03
  SPEAKER_02: What is the talk of the town here at Climate Week?
• 9:06
  SPEAKER_02: And um it's very interesting to see that we're back at discussing the business case for sustainability, but now it's different, right?
• 9:14
  SPEAKER_02: Okay.
• 9:14
  SPEAKER_02: Before a couple of years ago, we discussed why business needs to show up on the sustainability agenda.
• 9:21
  SPEAKER_02: Now we're so much further in that we're actually asking about how does sustainability affect the business of a single company.
• 9:30
  SPEAKER_02: And for that, you do need granular data, um, you do need more frequent data, you do need well-defined data.
• 9:37
  SPEAKER_02: So that is really how companies are using that sustainability uh reporting right now.
• 9:43
  SPEAKER_02: And that is what is on their agenda in the C-suite, including the CSO, but really driving it deep into risk assessment, climate, physical climate risk, for example, but other risks as well, in terms of dependencies for their particular business, in terms of resilience in the supply chain, in terms of where are my opportunities?
• 10:09
  SPEAKER_02: What are my competitors doing, and why do they define a certain opportunity?
• 10:14
  SPEAKER_02: And I haven't looked at that.
• 10:15
  SPEAKER_02: So it really, sustainability reporting really made it from a nuisance that has to be dealt with somewhere into the boardroom.
• 10:24
  SPEAKER_01: And so it sounds like there's been a real shift here in that they're really seeing value in this sustainability information.
• 10:32
  SPEAKER_02: But more than actually, that's a statistic that I actually remember, right?
• 10:36
  SPEAKER_02: It's about 70% of the companies see at least moderate or significant value from sustainability reporting, right?
• 10:46
  SPEAKER_02: And then, quite interestingly enough, when you correlate that um and you look at the companies that see significant value in sustainability reporting, they are the ones that are more likely to use technology to support it, right?
• 11:01
  SPEAKER_02: Yeah.
• 11:02
  SPEAKER_02: But they are also the ones that really drive the value beyond the compliance exercise, right?
• 11:09
  SPEAKER_02: As I just mentioned, risk management opportunities, supply chain resilience, and so on.
• 11:13
  SPEAKER_01: So you mentioned, Nadia, about Wave One reporters, and and I know you've done a lot of work with Wave One and led some surveys with the firm as well.
• 11:21
  SPEAKER_01: What are some of the lessons learned that we're seeing from Wave One or the early reporters?
• 11:27
  SPEAKER_02: Yeah, so um we've asked the question on um what would have helped your reporting, right?
• 11:34
  SPEAKER_02: And um overwhelmingly the response is well, I should have looked at technology earlier to help, right?
• 11:41
  SPEAKER_02: Some actually do mention AI.
• 11:43
  SPEAKER_02: Um, I should have asked for more resources.
• 11:47
  SPEAKER_02: I should have really brought it more into the boardroom and really get senior leadership support um to also get more resources to be able to do it more.
• 11:58
  SPEAKER_02: Right.
• 11:59
  SPEAKER_02: Some mentioned that they should have really liaised with their assurance provider earlier to help them with the uncertainties and the interpretation.
• 12:07
  SPEAKER_02: So it's it's a bit in retrospect, uh, the things that we have been recommending, right?
• 12:15
  SPEAKER_02: Companies come back and say, yes, that probably was a good recommendation.
• 12:20
  SPEAKER_02: And again, as I said before, that's what companies that already have reported are telling us.
• 12:25
  SPEAKER_02: Right.
• 12:26
  SPEAKER_02: So that is something for companies that are still about to report, that's probably good lessons to dig into a bit more.
• 12:32
  SPEAKER_01: And sometimes when it's coming from other companies, it might be easier to hear.
• 12:37
  SPEAKER_01: Well, we've talked a lot about systems and tools and AI, and that those can help support sustainability reporting.
• 12:45
  SPEAKER_01: Anything else that you would talk about related to technology and the use of that in sustainability reporting?
• 12:52
  SPEAKER_02: Well, um, I mean, it's still a relatively low percentage of the use of AI, right?
• 12:59
  SPEAKER_02: So 28% of companies, um, which also shows that um I mean it's vastly increased over last year, but it's still a low percentage.
• 13:08
  SPEAKER_02: So people are getting more comfortable with the technology and are putting it to use more, either in how they draft disclosures or in how they capture and evaluate data.
• 13:19
  SPEAKER_02: I think that will be something that will continue to develop drastically.
• 13:25
  SPEAKER_02: Companies are a bit worried about traceability when they use AI, but also that is not unexpected, right?
• 13:33
  SPEAKER_02: Um, and and the last comment that I make in that circumstance is um or on that topic is there will be an ask for transparency on the use of AI.
• 13:48
  SPEAKER_02: If you look at the governance um disclosures, but also generally what investors are asking for, if you go back to our investor survey, the use of AI and how companies think about it, how they control it, how they govern it, right, becomes a topic of external disclosure.
• 14:06
  SPEAKER_01: So we've talked a little bit too about the shift in that regulators are slowing down, they are taking a pause, they're rethinking some of the standards.
• 14:15
  SPEAKER_01: But really, sustainability reporting isn't slowing down overall, as you've said that that's continued to advance.
• 14:20
  SPEAKER_01: Is that right?
• 14:22
  SPEAKER_02: Well that is right because companies, again, are saying that they feel the pressure to get on with it, right?
• 14:31
  SPEAKER_02: So, yes, obviously, um the publication of sustainability reports um will slow down with respect to companies that have not reported yet.
• 14:44
  SPEAKER_02: But also a lot of companies that we surveyed um that haven't reported yet are saying that they will stay on the original schedule of the reporting deadlines.
• 14:55
  SPEAKER_02: So some of the large companies um that are so-called Wave 2 companies that now would have two more years to actually publish their reports, they're still saying we will publish a sustainability report, right?
• 15:10
  SPEAKER_02: And that might not be in full compliance with ESRS or that might be somewhere between GRI and ESRS also using a number of frameworks.
• 15:19
  SPEAKER_02: But again, that demand for transparency is steadily increasing.
• 15:25
  SPEAKER_02: And I think if I really step back and look at that, it's also due to the rising levels of pressures and uncertainties in this world that is fraught by geopolitical conflict, new um new areas of concern that are that have an influence on companies.
• 15:50
  SPEAKER_02: And companies want to be transparent about how they deal with this.
• 15:54
  SPEAKER_02: Right.
• 15:55
  SPEAKER_02: And for that, the means of financial reporting sometimes is too narrow.
• 16:00
  SPEAKER_02: So they're using sustainability reporting to also explain themselves.
• 16:04
  SPEAKER_01: And Nadia, we're talking about this survey being from a global perspective as well.
• 16:08
  SPEAKER_01: Are we seeing differences in that messaging across the globe, or is it pretty consistent in what you're hearing from obviously not every single person, but you know, is that a generally consistent across the globe?
• 16:19
  SPEAKER_01: It is generally consistent, right?
• 16:21
  SPEAKER_02: It is generally consistent.
• 16:22
  SPEAKER_02: Look, I'm I'm not gonna go into what companies are particularly pressured on by their particular regulator or in their environment, but it's globally a consistent message.
• 16:33
  SPEAKER_02: Um and and that just tells me that we have really evolved into a status where sustainability as a company action that helps them manage their risk and capture their opportunities, the understanding about it has deepened so much.
• 16:53
  SPEAKER_02: And then the desire to also be transparent about that has so much increased, right?
• 17:00
  SPEAKER_02: So um I think that is an overall general good development and good development going forward.
• 17:07
  SPEAKER_01: Agree.
• 17:08
  SPEAKER_01: So as we start to wrap up here today, Nadia, what would you be telling clients as they're thinking about sustainability reporting and what they should be thinking about in this upcoming year?
• 17:18
  SPEAKER_01: Get on with it.
• 17:20
  SPEAKER_02: No, simply look, um really start with.
• 17:24
  SPEAKER_02: So if you haven't look, let me collect my thoughts.
• 17:28
  SPEAKER_02: So, number one, um if you've already reported, right, step back and see where were the biggest difficulties and find remedies for that.
• 17:37
  SPEAKER_02: Don't just assume it's gonna go away, um, but really dig a bit deeper.
• 17:43
  SPEAKER_02: Also understand where are the really material areas and topics and go deep in into those.
• 17:49
  SPEAKER_02: Really embedded into your business, into your business decisions.
• 17:54
  SPEAKER_02: Right.
• 17:54
  SPEAKER_02: For companies that haven't started that yet or haven't reported yet, really start with the most material items, but also come at it from day one with a beyond compliance view.
• 18:09
  SPEAKER_02: Right.
• 18:09
  SPEAKER_02: What does that mean to me as a business?
• 18:12
  SPEAKER_02: Why would this reporting, why would these data be useful to me?
• 18:16
  SPEAKER_02: And from that decide on where you spend your energy.
• 18:19
  SPEAKER_01: Right.
• 18:19
  SPEAKER_01: Well, I've heard you talk about this a number of times, Nadia.
• 18:22
  SPEAKER_01: And I think that's always been a message which resonates with me is this the importance of sustainability information beyond compliance that really is about your business strategy and a business opportunity and using that data effectively in your business.
• 18:35
  SPEAKER_02: And and and I'm I'm starting to use slightly different words, right?
• 18:40
  SPEAKER_02: So um business strategy sometimes gets misconstrued to sort of end up in the once-a-year strategy update, right?
• 18:50
  SPEAKER_02: I think it's much more about your business processes.
• 18:54
  SPEAKER_02: Yeah, it's almost your daily business, your daily risk management as well.
• 19:00
  SPEAKER_02: Um you don't do risk management once a year, you you do it constantly on the risks that are within operation.
• 19:08
  SPEAKER_02: So I think sustainability data needs to be just brought into these processes, into this business thinking.
• 19:15
  SPEAKER_01: Yeah, and I guess that point, Nadia, is companies have more and more data this year.
• 19:20
  SPEAKER_01: And this is just another set of data that companies can use to use these different tools.
• 19:26
  SPEAKER_01: You're talking about whether that's AI or other technologies, to help look at this comprehensive sets of data and make better decisions.
• 19:32
  SPEAKER_01: So it's just more data that comes in to help companies make better decisions.
• 19:36
  SPEAKER_01: That's right.
• 19:37
  SPEAKER_01: Well, Nadia, thank you so much for joining me today.
• 19:40
  SPEAKER_01: And thank you so much for our listeners for tuning in or watching our video.
• 19:44
  SPEAKER_01: If you'd like more information, please go to pwc.com and our viewpoint website.
• 19:50
  SPEAKER_01: Thank you.
• 19:51
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• 19:53
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• 20:13
  SPEAKER_00: From Thought Leadership at PWC, I'm Heather Horn.
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