There is an increasing demand for skills and people with experience in Sustainability and Climate Reporting. As a relatively young but complex field that has received little attention in the past, the market still needs to develop the talent and skill pool required for a Sustainability Reporting transition at scale. 

Challenges: 

Despite increasing regulatory pressure, many companies still face the challenge of not having sufficient top-down support to make Sustainability and Climate Reporting a core strategic process. Below is a list of challenges we have identified together with a working group that most companies face as they start and progress their journey toward strategic Sustainability & Climate reporting. 

• Lack of management support: Management often misses the opportunities to support Climate Reporting because of its complexity and a lack of understanding. Management might need to fully grasp the complexity of sustainability issues or the potential impact that reporting can have on the company's reputation and stakeholder relationships. As a result, Climate Reporting can be seen as an additional burden or expense; some managers may not be aware of the value of dedicating resources to it. 

• Lack of accountability and targets: Managers often need more accountability, incentives, and targets to prioritise Climate Reporting, leading to a lack of action.  

• Lack of skills and experience: Climate Reporting is a relatively new field, and many professionals have yet to have the opportunity to gain formal training or education in this area. The skills gap is fuelled by a shortage of specialists in Switzerland and the global battle for talent.  

• Need for compliance AND climate knowledge: As compliance regulations for Climate Reporting become increasingly rigorous, there is a growing need for a shift in skill sets from a basic understanding of sustainability to a more comprehensive knowledge of compliance requirements. This trend is driving the intersection of the roles of Chief Financial Officer and Chief Sustainability Officer.  

• Complexity of such a multidisciplinary topic: The complexity of climate issues requires an interdisciplinary approach, which can be challenging for professionals specialising in a specific area.  

• Involvement of diverse stakeholders: Climate Reporting often requires collaboration across multiple departments and stakeholders, and this can be challenging due to communication barriers and conflicting priorities. 

Actions and Opportunities: 

Foster strong climate leadership:

To foster a strong climate leadership, companies should prioritise educating and training their management team on the significance of Climate Reporting and its profound impact on the business. Additionally, company boards should enhance communication with executives and the management team to ensure a clear understanding of Climate Reporting, emphasising its benefits and the risks associated with neglecting such reporting. Ultimately, the operationalisation of strong climate leadership is lived through implementing the proper process and policies. 

Opportunity: By educating and training management teams on the importance of Climate Reporting, companies can increase awareness and understanding of the benefits and risks associated with Climate Reporting. This can create a Climate Reporting culture and ensure management understands the value of sustainability and climate initiatives. Clarity of objectives and goals helps management to decide which data to be collected and reported and how this information can be used to drive business performance. 

Set clear targets and KPIs:

Companies should consider incentivising management to prioritise Climate Reporting by linking it to performance goals, which can increase accountability and provide the fertile soil to grow a culture that looks at climate challenges together with financial ones. 

Opportunity: Formalising targets and key performance indicators (KPIs) for management positions fosters accountability and provides incentives. Establishing appropriate sustainability and reporting targets is essential to enhance accountability while emphasising the importance of long-term goals rather than solely focusing on annual targets and ensuring that sustainability is integrated into the overall business strategy.

Invest in employee training and development:

Companies should invest in training and development programs to bridge the skills gap in sustainability and climate topics. Although external support through consultancies might be initially necessary, it will only be possible to manage and implement a successful climate strategy with the proper skills and knowledge in the company. 

Opportunity: Investing in employee training and development can benefit companies by improving employee skills, engagement, and retention, enhancing sustainability performance, and building internal capacity for climate initiatives. It also helps companies stay current with trends and comply with regulations while signalling a commitment to sustainability and improvement to stakeholders.  

Build cross-functional teams:

Companies should form cross-functional teams that bring together experts from different departments and disciplines to collaborate on climate initiatives.

Opportunity: Cross-functional teams can help ensure that climate-related topics are integrated into all aspects of the business and can foster a culture of collaboration and teamwork, improving overall organisational performance and productivity.  

Engage with stakeholders:

Companies should engage with their stakeholders, such as customers, suppliers, and NGOs, as engaging with stakeholders as part of mandatory scope 3 reporting brings numerous positive outcomes for companies.  

Opportunity: Stakeholder engagement offers a valuable opportunity to gain insights into stakeholder expectations and concerns, enabling the development of more targeted and effective sustainability initiatives. This stakeholder engagement fosters trust and establishes a shared sense of purpose, increasing stakeholder buy-in and support for sustainability endeavours. Moreover, it improves resiliency, quality control, and regulation compliance. Demonstrating a commitment to sustainability through stakeholder engagement enhances the company's reputation and brand value. Lastly, this process opens new business opportunities by identifying market needs and developing sustainable products or services that align with stakeholder demands.

Involve finance:

Companies should involve the finance department (CFO) in Climate Reporting for audit and assurance reasons, as finance professionals possess the necessary skills and knowledge to verify the accuracy and reliability of financial information in the climate report. Furthermore, financial data is frequently used as a basis for climate metrics, and finance professionals can ensure that these metrics are calculated correctly and in compliance with relevant accounting standards. 

Opportunities: Identify, manage & mitigate sustainability-related risks and opportunities which can significantly impact financial performance and reduce audit costs all while embedding it into an existing part of the organisation.