Reporting; resilience; trust - is 2016 their year in sustainability?

2015 ended on a high in Paris. What’s 2016 got in store?

Clinton Moloney, from PwC’s US Sustainable Business Solutions practice2015 , gives the first of a series of views from our global network on what’s likely to be the key themes.

In 2015, we witnessed several glaring crises related to environmental, safety and compliance issues that drove ongoing conversations on transparency, resilience and trust. We’ve also seen increased focus on international agreements with companies, cities, states and countries continuing to up their game.  New goals, practices and to better ways to engage and inform stakeholders are beginning to emerge.

So our US practice considered what can we expect for 2016.

We’ve identified three major trends that will affect the sustainability industry this year:

The reporting goes beyond the numbers

The ability for companies to consider non-financial indicators of success is testament to how dramatically the field of sustainability reporting and measurement has grown in the last 15 years. In fact, according to PwC’s 19th Annual Global CEO Survey, 72% of CEOs worldwide say their companies report on both financial and non-financial matters, and 76% say that business success in the 21st century will be defined by more than just financial profit. These numbers are very telling.

Existing frameworks for reporting on environmental, social and governance (ESG) standards are an important starting point to improve the visibility of corporate actions for customers and other stakeholders. For example, the Sustainable Accounting Standards Board (SASB) has come a long way in guiding companies through the disclosure of material sustainability information in standard SEC filings. While SASB’s sustainable accounting standards are voluntary, stakeholders are increasingly asking for full transparency and disclosures as investors continue to realize the increasing correlation between sustainability and financial performance. This has all led to integrated reporting concepts that drive a need for transparency.

2016 is the year that companies will put these concepts to work. The information needs of stakeholders will continue to evolve, along with increased market demand for sustainability disclosures.

Cities get religion in resilience

The global rise of cities has been unprecedented. According to the United Nations, nearly 70% of the world’s population will live in cities by 2050, up from slightly more than 50% today. At the same time, cities are faced with pressures to update their infrastructure and prepare for traffic, power outages, droughts, floods and other extreme weather events. Sustaining a city’s growth over time without endangering its foundational elements (such as economic diversity, people and the environment) is now one of the most relevant urban development challenges confronting our urban centres.

To plan for these challenges and the additional strain on critical resources that comes with it, several U.S. cities have taken a proactive stance. Los Angeles, for example, has unveiled its sweeping sustainability “pLAn” last year to address the challenges associated with sharply reducing water use in the face of drought to support growth and keep the city healthy and liveable for its residents. Other major urban areas have implemented similar initiatives including San Diego, New York and Chicago.

This year, we’re going to see more cities across the U.S. implement similar sustainability plans. Our recently announced commitment to the Intended Nationally Determined Contributions (INDCs) serves as another impetus driving action by cities and sub-nationals. But each plan needs to be unique – the context and dynamics of each individual city heavily influence the type of vision and strategies put in place to achieve sustainable competitiveness. And it’s not just the city governments that will need to initiate change – collaboration with private sector companies, universities, non-profits and the citizen population will be critical in making the vision for a sustainable future happen.

Trust is critical

We place our trust in governments and business to do what’s right and keep us out of harm’s way. This is especially true for the food we eat. While scientific advances have led to a greater understanding of food health and safety, it has also increased consumer expectations for companies to use this technology to ensure quality.

Coupled with stricter government regulations, companies now have more pressure than ever to improve standards, traceability and transparency, all while maintaining a positive brand image. Building trust in food is among the most complex problems that businesses and society must solve, but it is also one of the greatest opportunities for food companies that get it right. The ones that do will not only reduce their exposure to costly scandals that may otherwise damage their reputation, but could also increase bottom line revenue.

This year, supply chain transparency will be a top priority for food companies to improve food safety, sustainability, consumer desires, while reducing fraud. However, companies will be challenged by the lack of good means to see their value chains to the point of origin, assess the risks in those value chains, and manage the full chain for improved business value and consumer trust. Additionally, many more market participants will realize the potential for technology to transform food production, logistics and transparency.

Conclusion

These are just a few of the key themes we’ll see in the spotlight of sustainability in 2016. I’ll be continuing to write about other sustainability issues and encourage you to follow and engage with me on these pressing topics.

This blog also appears on LinkedIn. Follow Clinton Moloney’s updates here or on twitter @clintonmoloney.