The rise of technological innovation, which has enabled near-instantaneous exchange of information around the world, coupled with generational differences, has resulted in investors and consumers placing a huge emphasis on the external impacts of businesses.
The new generation is conditioned to be mindful of the effects of any action on the environment as well as external parties, hence sustainability has become an integral part of daily life. This awareness impacts those whom this generation will work for, buy from, invest in and even vote for.
The extensive reach of technology into everyday life means that stakeholders now expect to be able to access information quickly and conveniently. They demand information that is up-to-date, accurate and consistent. With this level of public scrutiny, companies are under even more pressure to present real-time and reliable sustainability information at all times.
Therein lies the issue facing corporates on the topic of sustainability.
As the existing directors and senior management of companies today grew up in a very different environment, they find it hard to imagine why investors would care so much about environmental, social and governance-related (ESG) factors.
It is this perception gap that makes corporate executives reluctant to invest in sustainability reporting, even though there is growing evidence that investors care. More than USD 70T assets under management (AUM) have signed on to the UN principles of responsible investing - that is more than half the world's AUM and growing.
Investors actually care more about sustainability issues than many executives believe.