Sustainability Reporting and Disclosures

Environmental, social, and governance (ESG) measure company impacts on the business finances and the local community. As a key ingredient of sustainability reporting, ESG is regularly mentioned in discussions as leaders focus on crafting long-term strategies for success.  

Addressing climate-related impacts is critical, as data from NASA shows Earth is heating up at unprecedented speeds resulting in an imbalance in the planet’s energy exchange.

The Earth Energy Imbalance (EEI) score represents the difference between energy that arrives on Earth (from the sun) and the energy that returns back to space. (Eco4Society) This fragile relationship is off balance due to rising temperatures on land and in the ocean. Melting ice sheets, coral bleaching, and algae blooms are merely symptoms of an ecosystem collapse.  

In fact, oceans normally store almost 90% of excess planetary heat, but the recent temperature rises negatively influenced the efficacy of this mechanism for keeping environmental balance. (Princeton) Therefore, Ocean Heat Content is a good indicator of changes in the EEI.

One climate scientist, Leon Simons, emphasized that recent patterns demonstrate that the rate of global warming has tripled in the past 20 years. (Leon Simons

Activating More Stringent ESG Regulations

Existing climate trends are alarming many, including those who are not part of the scientific community. Individuals like investors, business owners, insurers, customers, governments, and regular citizens are concerned about changing weather patterns and climate abnormalities.  

Several sustainability reporting organizations and international governments are raising the standards and requirements that the private sector needs to abide by and report on.

In Europe, Directive 2013/34/EU will require larger businesses to disclose on impacts their activities create by conducting double materiality assessments. For more details on this process please refer to our post on Material Sustainability (link).

In the USA, the Securities and Exchange Commission (SEC) will require companies to report on ESG factors as they impact the value chain, local communities, and other stakeholders.   

Reaching Urgency 

As the global community inches closer to two important years 2025 and 2030, the need for a standardized, globally approved, and accepted reporting standard grows more necessary.

By 2025 governments and businesses need to drastically cut down on carbon and greenhouse gas (GHG) emissions to ensure global temperatures don’t rise above 1.5 to 2C. This number is outlined in the Paris Agreement, a globally accepted treaty that mandates countries to monitor, verify, and publicly report on their emission-reduction targets. (NRDC)

Progress in this area is critical as the Intergovernmental Panel on Climate Change (IPCC) emphasizes that if global temperatures rise above 1.5C it can result in a major extinction due to severe droughts, extreme weather, hurricanes, and other stressors on human well-being.

Unpredictable weather patterns, declining natural resources, and climate instability are expediting all climate risks. At 2C all such disruptions will be more dangerous and irreversible.

Current models indicate that emission on Earth is far off from the necessary trajectory. In fact, according to some of the current targets laid out by governments, the future temperature rise is estimated to be contained only at around 2.9C. Significantly higher than required by IPCC.

Lackluster and unambitious responses will impede the possibility of governments reaching the 2030 United Nations Sustainable Development Goals (UN SDGs). UN SDGs provide a blueprint toward a life on earth where individuals have access to decent jobs and pay, have their basic needs met, and live in safe and secure neighborhoods, with access to quality health.

Recent economic and social disruptions, due to the COVID-19 pandemic, have caused significant delays and setbacks in the progress that was made previously on the SDGs. 

Case for Businesses and ESG

The case for sustainability reporting in business could not be clearer and more necessary. Whether businesses choose to engage in ESG disclosures due to external pressures (regulations, market pressures, customers demand), or internal pressures (employee advocates, industry requirements, competitive advantage), getting a clear, accurate, and detailed picture of sustainability impacts on the business and the customers is no longer an option, but a demand.  

At Domoto Brands, we understand the urgency and quality that businesses look for when measuring, analyzing, and reporting on their sustainability performance. Having serviced a number of businesses spanning a variety of sectors and unique requirements, we have the experience and know-how to help any company on its ESG journey.  

To learn more, download our brochure or contact us directly at info@domotobrands.com. 

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