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Harmony Analytics

Takeaways from the 2024 U.S. Sustainability Reporting Landscape

A recent Harvard Law School analysis of 250 sustainability reports from S&P 500 companies highlights emerging trends and challenges that directly impact the financial sector.

Here’s what’s changing:

  • Responsible AI Enters the Conversation: Approximately 21% of companies now mention the responsible use of AI within their 2024 Sustainability Reports. This is the first time this data point has been tracked, and it’s expected to grow as companies face more scrutiny around AI’s role in ethical business practices.
  • Report Lengths Growing: The average report now spans 83 pages, reflecting a greater focus on environmental and social factors (a 20% increase from the 2021 average of 70 pages). In 2024, sustainability reports varied significantly in length, ranging from as short as 15 pages to as long as 211 pages.
  • Double Materiality in Focus: Companies are increasingly adopting the concept of double materiality—addressing both financial and non-financial impacts. This approach is essential for evaluating risk in your portfolios, especially as European regulations like the Corporate Sustainability Reporting Directive (CSRD) push this framework globally.
  • Global Standards Gaining Traction: International frameworks such as TCFD (Task Force on Climate-related Financial Disclosures) and IFRS (International Financial Reporting Standards) are now being widely adopted.
  • External Assurance Expanding: External assurance is increasingly covering “social” data points, including labor practices and supply chain integrity. This evolution offers more data for evaluating potential risks related to workforce management and community impact.

Actionable Insights for Capital Owners and Managers:

  • Focus on Comprehensive Data: Ensure your portfolio companies are providing clear, consistent data on environmental and social performance, particularly with new regulations expanding the scope of disclosures.
  • Anticipate Regulatory Shifts: Companies that adopt international frameworks like CSRD and IFRS ahead of time will be better positioned to navigate regulatory requirements, reducing exposure to compliance risks.
  • Privacy on AI: Access to a turnkey, pre-trained, private LLM (Large Language Model) that operates within a closed environment ensures data privacy and compliance with rigorous security standards. Stay tuned for more developments from Harmony Analytics on this front.

Harmony Analytics and Your Business

Harmony Analytics simplifies compliance and accelerates insights from sustainability reports. We streamline the process, helping you quickly extract actionable insights from reports—whether they’re 15 or 211 pages long. Connect with us to streamline your reporting needs and drive smarter and better-informed decisions.

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