Analyst Insight: Megatrends in Sustainability Reporting

2023 and 2024 are shaping up to be monumental years for sustainability reporting and regulations. The European Union’s (EU’s) Corporate Sustainability Reporting Directive (CSRD), California’s Senate Bill (SB) 261, and the impending U.S. Securities and Exchange Commission (SEC) ruling have put a spotlight on the corporate sustainability reporting scene. As companies adapt to new regulations, their climate targets are becoming more aggressive, and the amount of climate data being reported is rising. The vast majority of Fortune 500 companies are now reporting Scope 1 and 2 emissions, and the focus of companies at the forefront of sustainability is shifting toward Scope 3 emissions and issues related to “double materiality” such as biodiversity.

The 1Q 2024 edition of the Guidehouse Insights Corporate Sustainability Tracker compares Scope 1, 2, and 3 emissions as reported by 300 selected companies across 20 industries, for the years 2018 through 2022. It includes sustainability goals that companies have established, such as dates for net-zero/carbon-neutral targets, science-based targets, and achieving 100% renewable electricity. New in this edition, the Tracker reports progress toward achieving 2030 targets and the value of emissions reductions needed to meet those targets.

This accompanying Analyst Insight documents the Tracker’s most recent findings, including top-performing industries for Scope 1, 2, and 3 reporting and target setting, and corporate sustainability drivers and barriers. It evaluates which industries have focused most on Scope 3 emissions, where industries have additional opportunities for improvement, which industries have the highest emissions, and which industries have the greatest need for sustainability services. Finally, the report analyzes major trends, including the evolving nature of sustainability reporting/regulations, the rise in nature-based reporting, and innovative solutions for reporting Scope 3 emissions. The report concludes with recommendations for companies and other key stakeholders.