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Article

27 Sep 2021

Author:
Richard Howitt, Strategic advisor on corporate sustainability, Senior Advisor at Frank Bold, formerly MEP and CEO of the IIRC

Briefing on the benefits of mandatory sustainability reporting by business – Part Two

"The business case is won - how the benefits of mandatory sustainability reporting by business, really do outweigh the costs – Part Two", 27 Sep 2021

In our earlier article, new evidence was presented which makes a decisive case that the European Union’s draft Corporate Sustainability Reporting Directive (CSRD) and accompanying European sustainability standards, will generate direct business benefits and lower business costs, as well as delivering gains for investors and contributing to sustainable development goals for Europe as a whole. In this second article, we demonstrate what we call a ‘wave’ of evidence which complements and reinforces the European findings. We analyse why this has not been recognised more fully before, recognising limitations in the standard cost model, which is shown to be unable to accommodate the pace of change as Europe and the world makes the transition to a low carbon, sustainable economy. We present new models for how business value creation can be calculated and argue that the ‘business case’ for companies to act sustainably and to report on their sustainability performance, has now been won. 

The traditional ‘business case’ for sustainability reporting has been put in manifold business conferences, research studies and by sustainability professionals for more than twenty years.

This ‘business case’ for what was formerly called corporate social responsibility has always argued that spending (and reporting) on the environmental and social impact of the company pays itself back in terms of direct cost reductions, better risk management, improved reputation, employee and customer loyalty.

Yet sustainable business has sometimes been perceived as an industry in its own right, where such arguments have had limited impact beyond ‘preaching to the converted’.

Today, both the sheer volume of the evidence which is now assembled and new thinking about economic models in the face of the size and urgency of sustainability challenges faced by companies, have created a fundamental shift in the way businesses perceive the positive benefits of sustainability and its reporting...

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