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The global push toward sustainability is reshaping corporate priorities, and the latest findings from KPMG’s 2024 Survey of Sustainability Reporting reveal the significant strides and challenges that businesses face in this transformative journey. For asset managers and stewardship professionals, these developments signal an urgent need to rethink how they engage with portfolio companies and leverage technology to drive sustainability performance and long-term value creation.
KPMG’s survey analysed sustainability disclosures from 5,800 companies across 58 countries, revealing that sustainability reporting has become a norm among global giants. 96% of G250 companies, representing the largest 250 firms globally by revenue, report on ESG factors, with 80% of N100 companies (the largest 100 firms in each surveyed jurisdiction) following suit.
This trend is not just about regulatory compliance – it’s about preparing for a more transparent and accountable future. For asset managers, this translates into greater access to ESG data, enabling better assessment of portfolio risks and opportunities.
One of the most significant trends identified is the growing adoption of double materiality. This approach examines both a company’s external impacts on the environment and society, and the financial risks and opportunities stemming from these factors. Half of the G250 companies surveyed now utilise double materiality assessments – a sharp rise from previous years.
The EU’s Corporate Sustainability Reporting Directive (CSRD), which mandates double materiality, is a key driver of this shift. Asset managers must align their stewardship practices with this evolving standard, encouraging portfolio companies to adopt comprehensive materiality assessments that enhance risk management and value creation.
Despite the proliferation of mandatory frameworks like CSRD, voluntary reporting standards such as the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) remain widely used. 77% of G250 companies leverage GRI, while SASB is particularly popular in the Americas.
However, regional disparities in standard adoption persist. For instance, while nearly all surveyed companies in Japan align with TCFD (Task Force on Climate-related Financial Disclosures) recommendations, adoption in other regions, such as the Middle East and Africa, lags.
This fragmentation underscores the need for asset managers to engage actively with portfolio companies to ensure they not only
Corporate commitments to climate action are gaining momentum. 95% of G250 companies now have carbon reduction targets, a significant leap from 80% in 2022. Moreover, 72% of G250 companies disclose climate risks in line with TCFD guidelines, a testament to increasing investor and regulatory pressure.
For stewardship professionals, this highlights the critical role of engagement in holding companies accountable for their climate commitments. Technology solutions like those offered by SI Engage can streamline data analysis and facilitate meaningful dialogue, ensuring that portfolio companies stay on track to meet their goals.
While ESG reporting is on the rise, KPMG’s survey reveals persistent gaps in reporting quality. Most companies rely on narrative descriptions rather than quantitative analyses or scenario modelling to disclose climate, social, and governance risks. Only 12% of G250 companies use scenario analysis for climate risks, and a mere 2% quantify financial impacts of ESG factors.
This is a missed opportunity. Asset managers and stewardship teams must advocate for more robust, data-driven reporting, emphasising the importance of quantifiable metrics in decision-making and performance evaluation.
KPMG’s findings make it clear: the move to mandatory reporting represents a seismic shift in the corporate landscape. For asset managers and stewardship professionals, success lies in leveraging advanced technology to navigate these complexities.
Platforms like SI Engage enable teams to:
By integrating such tools into their workflows, asset managers can ensure that their strategies align with the evolving regulatory environment while maximising portfolio resilience and returns.
The path to sustainability is not one that companies can walk alone. Asset managers and stewardship professionals must play an active role in guiding portfolio companies through this transition. Engagement on material topics, from carbon reduction to biodiversity, is essential for ensuring that companies not only meet regulatory requirements but also unlock the full value of their ESG strategies.
As sustainability reporting becomes increasingly mandatory, the ability to adapt, engage, and innovate will define the leaders in this space. By embracing technology and fostering meaningful collaboration, asset managers can position themselves, and their portfolios, for success in a more sustainable future.
