Sustainability reporting is here — but confidence in data isn't

Amid the implementation of mandatory climate disclosure requirements brought into Australia this year, a troubling confidence gap is surfacing among reporting teams — one that undermines regulatory compliance, as well as stakeholder trust.

In a recent survey we undertook with reporting practitioners across the globe, we found that just 30% of Australian professionals feel very confident in the accuracy of financial and non-financial data prior to internal review, well below the 54% of global peers. Meanwhile, 43% of Australians identified regulatory changes as their biggest challenge to business performance this year — well above the global average of 36%.

The results speak for themselves — regulatory pressure is mounting, and the confidence in the data needed to meet that pressure is lagging behind.

To overcome this, organisations need more than quick fixes or surface-level adjustments — they must redefine how data is gathered, governed and used across the enterprise.

A shift in expectations

It makes sense that regulatory pressure is top of the concerns list for businesses — starting from this year, large Australian companies are required to disclose climate-related financial risks, including scope 1 and 2 emissions, with scope 3 reporting requirements expected later in the year. The shift from seeing sustainability reporting as optional to essential is clearly heightening pressures. Businesses now not only have the lens of scrutiny aimed at their financials, but at their sustainability data as well.

This shift has subsequently raised expectations in accuracy, auditability and traceability. Boards, investors and assurance providers now require the same ethical standards for emissions data, as they do from income statements. That means siloed and outdated systems, and out-of-control spreadsheets, are no longer fit for purpose.

The risks of inaccuracy

Low confidence in financial and non-financial data hasn’t come out of nowhere — in additional research we undertook late last year, around a third (33%) of Australian executives do not fully trust their financial data, compared to just a quarter of their global counterparts.

But this isn’t just an operational challenge, it’s a business risk. Inaccurate or unreliable reporting can cause irreparable reputational damage (greenwashing accusations are very hard to shake) and can come at a massive financial cost — businesses can be fined millions by the Australian Credit Licence (ACL) and Australian Competition and Consumer Commission (ACCC).

Additionally, trust between stakeholders and investors can be eroded — a serious risk in an era where transparency is a key driver of consumer behaviour.

For reporting teams, this challenge is compounded by growing complexity. Financial and non-financial disclosures must now be mapped across multiple frameworks, assured by third parties, and made comparable year over year — all while facing increasing time pressures.

What smart businesses are doing differently

These challenges need to be addressed swiftly to reduce risk. It’s why many businesses are moving away from fragmented reporting processes and shifting towards cloud-based platforms that streamline and automate reporting.

These environments link financial and sustainability data in real time, enabling teams to work from a single source — rather than riffling through 100 different spreadsheets. This means that when updates happen at the source, they flow through automatically to every instance. Not only does this reduce manual labour and confusion, but it also gives businesses more predictability and reduces the likelihood of last-minute surprises.

By employing a connected approach, collaboration can be enhanced across departments. Finance, sustainability and other integral teams can work together in real time, manage data efficiently and produce audit-ready reports — making reviews faster and more transparent. It also means less manual work for employees, and more time to focus on strategic initiatives.

For companies wanting to shift their mindset from viewing regulatory changes as a burden to an opportunity, agility and accuracy is paramount. An agile and accurate system is a game changer for organisations wanting to respond quickly to new disclosure requirements and reduce compliance risk.

Building confidence from the inside out

Building confidence is the key to a successful business, one in which workers have trust in the systems, as well as the transparency of their company. This starts by leveraging systems that make reporting repeatable, traceable and scalable. It requires giving teams the tools necessary to link narrative to numbers, compare disclosures over time, and demonstrate data lineage all the way back to the source.

Australia’s regulatory framework is shifting fast, and business, as usual, is no longer meeting current needs. As sustainability and financial disclosures converge, businesses that adopt and invest in systems that promote transparency, connectivity and trust will find themselves brimming with confidence, at last, in their data.

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