‘Embrace ESG Omnibus as a strategic opportunity for sustainable growth’

The ESG Omnibus – the set of proposed changes regarding sustainable reporting – should not be a reason for companies to sit back. On the contrary, it offers the time to truly integrate sustainability into the current business strategy. A strategic and economic opportunity, says Femke Helgers, PwC's sustainability and strategy expert.

Do not sit back

The green transition goes beyond mere compliance. Integrating sustainability into your business offers not only a strategic opportunity but also economic opportunities to invest in innovation, make resource usage more efficient, and strengthen the resilience of the supply chain.

Potential delays in sustainability reporting due to the recently announced ESG Omnibus should not be a reason to sit back. Here’s why:

Reality shows the importance of sustainability, also for business performance. 

Sustainability more important than ever

Sustainability is as important as ever. Our climate and the biodiversity are under enormous pressure. The World Metereological Organisation confirms that 2024 has been the warmest year on record, about 1.5 degrees above pre-industrial levels and according to the United Nations one in eight animal species face extinction. At the same time recent research from PwC indicates that  $58 trillion (or 55%) of global GDP is highly or moderately dependent on nature and her sources.  

Nowadays, due to climate change, we see more and more extreme weather events, resource overexploitation, and supply chain disruptions. This has made the need for coherent strategic business responses to sustainability issues more urgent than ever. This shows sustainability is not just about meeting regulatory requirements; it's an essential necessity for survival and success. 

Acting now means creating long term value

There is a strong and ongoing demand for reliable sustainability performance and information, driven by investors, employees and consumers.  PwC’s 2024 Investor Survey shows that:

• 71 percent of investors believe that companies should integrate ESG (Environmental, Social, Governance) factors into their corporate strategy.
• 50 percent assert that it is essential for companies to adapt their value creation processes to address climate change.

Additionally, research from the European Investment Bank indicates that over three-quarters of Europeans aged 20 to 29 prioritize sustainability when choosing an employer. This is an important group for attracting new talent within companies. Consumer behavior also offers further insights: PwC research reveals that consumers are willing to pay a 9.7% premium for sustainable products, even amid rising costs and inflation.

Until recently, the Corporate Sustainability Reporting Directive (CSRD) had been a strong driving force for many companies in publishing reliable sustainability reports. Businesses that are not obliged to the reporting requirements (anymore), can still voluntarily adhere to (part of) the CSRD and the Corporate Sustainability Due Diligence Directive (CSDDD). By voluntarily demonstrating transparency, frontrunners may be able to differentiate themselves even further.

Moving forward, how to get started today?

Now that we’ve established the pressing need for proactive sustainability efforts, what should your organisation do to move forward? Here are eight actionable strategies:

1. Focus on strategic relevance: Use your Double Materiality Assessment (DMA) and Impact, Risks and Opportunity (IROs) mapping not just as a tool for compliance, but as a means that creates insights to evaluate and enhance your sustainability strategy.
2. Align strategy with value drivers: Focus on where you will get the most return on investment. For example, understand what stakeholders care about and differentiate in these areas, to drive growth.  
3. Improve / redesign the governance: Ensure robust governance structures are in place to support sustainability objectives. Clarify who is responsible for which topic at what level and ensure continuous monitoring of progress through regular management processes (internal reporting, performance reviews, etc.).
4. Prioritise policies, actions and targets: Many companies struggle with establishing clear targets and supporting action plans, particularly beyond climate issues, but now is the time to get your house in order. Policies, action plans and clear targets help you to reduce risks and make use of the identified opportunities.
5. Integrate sustainability into the core business processes: Integrate sustainability performance management into essential business functions. Think about budgeting, planning, forecasting, and capital expenditure processes. 
6. Develop robust data: Strengthening reporting governance, technology, processes, and controls will prepare you for any reporting and assurance needs, however it is also essential for data-driven insights for performance improvement.  
7. Build consensus at the board level: Engage your leadership team to establish the necessary level of ambition. Showcase what investment is needed per ambition level and the expected outcomes; this is a critical step for strategic alignment of sustainability and business.
8. Make sustainability mission critical: Develop buy-in across the organisation, ensuring that sustainability is viewed as integral to your wider business objectives rather than a mere compliance task.  

Embrace the ESG Omnibus as a strategic opportunity

The Omnibus should not result in stopping sustainability initiatives, but as an opportunity to take the time to evaluate your sustainability initiatives and align these with strategic value drivers of your organisation. This proactive approach enables organisations to flourish while making meaningful contributions to sustainability goals, ultimately fostering sustainable growth and long-term value.