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- 55% of CFOs fear that their industry’s sustainability reporting is perceived as greenwashing due to lack of thorough due diligence.
- 47% of finance leaders and 53% of investors doubt companies will achieve their stated sustainability targets.
- CFOs must reset nonfinancial reporting to meet investor demands and align sustainability with financial decision-making.
Greenwashing Fears in Sustainability Reporting: CFOs and Investors Sound Alarm
Concerns over the credibility of sustainability claims are growing, with 55% of CFOs surveyed in EY’s 2024 Global Corporate Reporting Survey warning that their industry’s sustainability reporting risks being perceived as greenwashing. This fear stems from concerns that insufficient due diligence and unverified disclosures could undermine trust.
The survey, which polled over 2,000 finance leaders and 815 institutional investors globally, highlights widespread doubt about companies’ ability to meet sustainability targets. Specifically, 47% of finance leaders and 53% of investors question whether these goals are realistic, citing poor-quality disclosures that fail to show substantial climate action.
A staggering 96% of finance leaders express worry that their organizations’ nonfinancial data is not fit for purpose to support decision-making, citing problems with data formats (39%) and inconsistencies (35%).
Half of the finance leaders surveyed fear that organizations will miss vital sustainability targets in the coming years. Only 47% of finance leaders and 53% of investors believe most corporates are on track to achieve stated goals. The focus on nonfinancial drivers of value is intensifying, with 69% of finance leaders noticing more investor inquiries about these issues compared to two years ago.
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Need for Credible, Verifiable Reporting
The risk of greenwashing also raises the threat of potential litigation from stakeholders if companies are found to be overstating their sustainability achievements. According to the report, “While disclosures are no doubt made in good faith, finance leaders clearly doubt that the necessary due diligence has been carried out.”
For CFOs, addressing these challenges will require a fundamental reset of nonfinancial reporting practices, ensuring that sustainability efforts are transparent, verifiable, and aligned with financial decision-making.
For further insights, read the 2024 EY Global Corporate Reporting Survey.