Insights from the 2024 ESG Survey: Navigating the Move to Mandatory Reporting
As GHG reports move from a voluntary exercise to a regulated mandate, KPMG 2024 on sustainability ​reports ​provides essential information on trends, challenges and opportunities. Here is an analysis of the survey results by key themes:
ESG and Sustainability ​Reporting
The survey shows that sustainability reports are now an integral ​part of business practice, with 96% ​of ​G250 ​companies participating in this activity. This figure has remained stable since 2020, highlighting the deep-rooted nature of GSE practices among the world’s largest companies. N100 adoption is 79%, ​and some ​regions are experiencing a sharp increase. ​For example, Saudi ​Arabia and Chile reported a 22 percentage point ​increase in ​adoption rates due to increased regulatory and market pressures. However, disparities in adoption rates persist at the global level. The inclusion of new countries with lower reference rates affected their overall number, while the Asia-Pacific region ​continued its steady growth, now with a 92 per cent adoption rate among its enterprises.
Despite the progress ​made, some challenges remain. Nine of ​the ​11 largest non-reporting companies are located in China, which may ​indicate localized barriers to the integration of ESG standards. This underscores the need for appropriate strategies to overcome regional barriers and increase ​consistency in GHG reporting.
Integrated Reporting
The integration of ESG data into annual reports reflects the growing importance of sustainability in corporate governance. Over 82% ​of G250 companies include information on GSS in their reports, from a decrease ​to 68% in ​2022. This ​recovery is ​largely due to the increased participation of Chinese and U.S. companies, which collectively account ​for 60% of the G250 cohort. Among ​N100 enterprises, integration ​remains stable at 62%, with significant regional differences. For example, ​81 per cent of companies in ​the Asia-Pacific ​region provide ​detailed data on SBD in their reports, compared with ​only 50 per cent in the Middle East and Africa.
Sectoral trends ​are equally revealing. The automotive industry leads 72% ​by integrating ESG into its reports, while medical care and retail trade are ​50%. This variability indicates that industries with more direct environmental impacts or regulatory review are more proactive in integrating ESG data. While ​countries such as Japan and ​Thailand have achieved universal integration, others, such as Angola and Venezuela, remain at the ​end ​of the spectrum, highlighting opportunities for targeted interventions.
Guidelines and Standards
Global Reporting Initiative (GRI) guidelines continue to dominate, used by 77% of G250 companies and 71% of N100 ​companies. However, the incorporation of other frameworks, such as the Accounting Standards Board standards for sustainability and securities trading guidelines, is increasing. The adoption of SASB standards has increased to 56 per cent ​among G250 companies ​and 41 per cent for N100 companies, largely driven by high usage in the Americas. Meanwhile, there has been significant growth ​in the value-sharing guidelines, particularly ​in the Middle East ​and Africa, where 62 ​per cent of enterprises ​adhere to ​these frameworks.
The proliferation of norms has a double-edged sword. While it ​provides flexibility, it also increases the complexity ​of businesses operating in ​several jurisdictions. Future mandates under the European Directive ​on Corporate Sustainability (CSRD) and the International Sustainability Standards Board (ISSB) ​can accelerate this landscape by promoting greater harmonisation in ESG reporting practices.
Assurance
The demand for independent ​data disclosure guarantees on sustainability is increasing. Of the G250 companies, 69% received ​53 per cent ​third party guarantees in 2022. In ​the N100 cohort, this figure is 54%, and Europe is at the ​top of the 59% burden. In Asia – the Pacific and the Americas, more than ​half of companies provide security, but the Middle East and Africa are deeply sorry for 34 per cent.
The ​introduction of mandatory guarantee requirements under the EU CSDD is expected to further increase ​these figures. While some sectors, such as automobiles and mining, have higher safety rates (70% and 63% respectively), others, such as ​transportation and recreation, remain under-represented at 47%. As stakeholders increasingly ​demand ​transparency, safeguards ​will play a key role in enhancing the credibility of GHG reporting.
Materiality
Physical assessments, which assess the significance of ESG impacts, are ​now used by ​78% of G250 companies and 79% of N100 ​companies. One of the strengths of the survey is the increase in double ​materiality, which takes into account both the financial impacts on the ​company and the social and environmental impacts of the company. This approach is already adopted by 50% of G250 and ​42% ​of N100 companies, indicating a shift ​towards more comprehensive ​reporting.
Geographically, Asia-Pacific led to the adoption of the 85 ​per cent physical valuation, followed by ​the 78 per cent Middle East. Europe, which stands at 45%, is ​expected to increase ​significantly due to the requirement for double materiality of the CSDD. However, North America accounts for ​only 64% of ​firms that conduct materiality assessments, and only 25% use dual materiality, indicating a slower adoption curve ​in this critical region.
Carbon Reduction Targets
The proportion of companies setting carbon reduction targets has grown significantly, and 95% of G250 companies publish these targets. This reflects an increase of 15 percentage points ​since 2022. ​Among N100 companies, the ​adoption rate has increased to 46 per cent, an encouraging trend as more companies align their activities with global ​climate targets. However, ​the ​quality ​and ambition of these objectives vary considerably, with ​many companies opting for progressive and non-transformative objectives.
Regions such as Europe and the Americas have higher ​adoption rates, driven by regulatory pressures and market expectations. On the other hand, adoption ​in regions such as Africa and some parts of Asia underlines ​the need to strengthen capacity and ​access to climate finance so that more companies can set and achieve important goals.
Biodiversity
Biodiversity information remains an emerging but growing area, with ​about half of the G250 and N100 companies now including ​it in their revelations. This represents an improvement of only ​25% four years ago. However, progress has ​recently declined, ​indicating that while awareness has increased, there is insufficient practical implementation.
Significant regional differences persist as the Middle East and Africa reach global averages. The increasing integration of biodiversity considerations into GHG strategies is evidence ​of growing recognition of their importance, but also underlines the need for clearer guidelines ​and ​parameters to promote adoption.
Sustainable Development Goals (SDGs)
The ​survey ​highlights the widespread adoption of the ​United Nations Sustainable ​Development Goals (SDGs) as a framework for sustainable business development efforts. However, the depth of ​engagement varies considerably. While many companies harmonize their relationship with the SDGs, they ​do not integrate them into their core strategies or measure their direct contributions.
Enterprises in Europe and Asia and the Pacific are leading to alignment with SDGs, often driven by regulatory ​mandates. However, achieving meaningful alignment remains ​a challenge, particularly for firms in regions where awareness and resources are limited.
TCFD and IFRS S2
The recommendations of the Working ​Group on Climate Financial Disclosures have been increasingly adopted, ​and nearly three quarters of G250 companies have aligned their climate risk reports with this framework. These companies are thus well placed to ​comply with the upcoming IFRS S2, which are ​highly informed by TPFD.
The integration of these frameworks into global reporting practices reflects the growing importance of climate-related financial reporting in risk management and decision-making. However, ​many companies, particularly in emerging markets, continue to face significant obstacles in the effective implementation of these standards.
ESG Risks and Governance
The survey highlights the increase in ESG board membership, with 56% of G250 companies now naming sustainability ​leaders. This represents an increase of 11 percentage points since 2022. In addition, 41% of G250 companies now link executive compensation to ESG performance, highlighting its ​growing strategic importance.
Governance structures remain uneven in all regions and sectors, and ​developed markets lead ​to the integration of environmentally ​sound management into decision-making. As regulatory frameworks evolve, strong governance will be essential to address the complexity of mandatory reporting of GHGs.
The 2024 ​ESG survey highlights ​the rapid evolution of sustainability reporting, ​based on regulatory mandates and stakeholder expectations. While progress is significant, regional and sectoral disparities underscore the need for continued collaboration, capacity-building and ​innovation. As companies prepare for mandatory ​frameworks such as the CSDD and the BSI, those who proactively ​adopt these changes will be better placed to thrive in a global economy focused on sustainability.
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