In March 2024, the SEC passed a major climate disclosure ruling, but intense pushback delayed its implementation. While the scope and fate of the regulations remain in limbo, most companies realize they will need to share ESG disclosures in the future. It will be closely watched.
States like California are advancing laws like SB 253, which will require large companies to disclose Scope 1, 2, and 3 emissions, while others resist ESG policies altogether. This creates a complex regulatory environment for businesses to navigate.
Internationally, regulations like the EU’s Corporate Sustainability Reporting Directive (CSRD) are raising the bar. Businesses face increasing pressure to align with global ESG frameworks to stay competitive.
2 - Investment stakeholders
Even without sweeping U.S. regulations, investors are driving ESG action and demanding transparency.
Over 30 major investors recently urged food and beverage companies to disclose the “healthiness” of their products, linking ESG risks to public health concerns.
Companies are responding: The proportion of S&P 500 firms assigning sustainability oversight to their audit committees surged from 6% in 2021 to 22% this year.
With significant capital flowing into ESG-focused funds, businesses recognize the importance of managing risks and seizing opportunities tied to sustainability.
3 - Market and consumer trends
Consumers care about ESG, but their behavior tells a more nuanced story.
A recent NYU Stern study found that while consumers show a strong preference for ESG-responsible companies, the impact on spending was small, and often short-lived. Many admitted they forgot ESG details or didn’t have time to consider them.
What consumers do react to are negative issues, like greenwashing or public health risks. These can quickly erode trust and drive them to switch brands.
For businesses, this makes ESG strongly about mitigating risks, leveraging transparency to back up claims, track and trace, and make ethical choices.
Driving ESG forward, even under pressure
Even with increased scrutiny, companies aren’t backing away from ESG. As one article put it, “ESG investments are alive and well. Rather than shelving these initiatives, many leaders grow more ambitious in their approach to ESG work - they’re just being quieter about it."
New issues also arise, like governance around AI - tackling questions about ethics to prevent bias, ensure fairness, and manage risks. Businesses are also addressing other concerns, such as water shortages, protecting natural habitats, and improving working conditions in supply chains.
Some companies are combining ESG efforts with Corporate Social Responsibility (CSR) into one unified strategy. This approach helps them handle challenges more effectively and share progress in a clear and positive way.
Data leads the way
No matter the approach, businesses must connect these efforts to specific goals - like lowering risks, saving money, or creating long-term value. However, delivering on ESG promises requires data that is accurate, accessible, and ready to meet a growing set of expectations.
Audit-ready data builds confidence.
Investors, regulators, and stakeholders want proof - not promises. Audit-ready data means having information that is easily accessible, transparent, and reliable. Companies that organize their data proactively can confidently share their progress, respond to reporting requests, and reduce the risk of missteps.
Backing up your claims matters.
Trustworthy data backs up your achievements and product-specific claims. It ensures the story you tell about your products and brand withstands scrutiny and avoids accusations of greenwashing. The ability to track and trace materials is equally critical - knowing where raw materials come from, how they’re used in production, and where they go as products are shipped and used by end customers.
Strong governance makes it possible.
Good data governance is essential to managing ESG data effectively. It’s about understanding how data moves through your organization, where it’s stored, and who’s accountable for its accuracy and integrity. When governance is prioritized, businesses can trust their ESG data to meet both current demands and future challenges.
ESG data needs a framework.
As we often say, bad data in means bad results out - and ESG is no exception. Poor-quality data can lead to skewed insights and create risks with compliance or investor due diligence. But here’s where things get even trickier: ESG data doesn’t come neatly packaged in its own category. It’s embedded in every part of your business, reflecting your organization’s impact on environmental, social, and governance issues.
To access and trust your ESG data, you need confidence in your entire data management framework. While this might feel overwhelming, it doesn’t have to be. Amplifi has helped organizations worldwide adopt a phased approach that ensures data is accurate, up-to-date, and ready to scale with the business.
Want to take the next step?
Our guide, Unlocking ESG: A guide to finding your ESG hotspots, can tell you all you need to know - from where ESG data might be hiding in your organization, to how to make it available when and where you need it. Download it below!
