Solving the sustainability reporting maze: Compliance vs. compelling storytelling

Post Date: 17 April 2025
Read Time: 8 minutes

Are reporting rules inadvertently burying the authentic stories companies need to truly inspire action and foster trust? That’s a danger, but some are bucking the trend.

Around the world, the question is being asked about how companies should best report on sustainability.

As my colleague, Rupali, argues in the article 'Navigating uncertainty: Corporate sustainability in a volatile world', in Europe uncertainty reigns as the proposed EU Omnibus package goes through its legislative stages. Sustainability practitioners are left grappling with the impact of potential changes to reporting timelines, scope, and data requirements on their sustainability performance disclosures.

In 'All over for ESG?' Charlie and Sam demonstrate well the complexities of the US landscape, with the growing anti-ESG sentiment balanced against global investors’ demand for transparency on ESG risks. US companies that conduct business globally feel the pressure to align with global standards.

Meanwhile, across Asia, ISSB standards that aim to promote global comparability of sustainability disclosure are gaining traction. In Japan, the Sustainability Standards Board of Japan recently issued inaugural Sustainability Disclosures standards aligning with the ISSB. Singapore is set to mandate climate-related reporting in line with the ISSB standards, while Australia’s phased reporting obligations came into effect in 2025.

The overall landscape is complex and dynamic, with some regions accelerating while others are slowing down. But the general trend towards sustainability reporting regulations is here to stay and that is exerting undeniable influence on companies’ approach to reporting and even communications. Whether it’s CSRD or ISSB, compliance is increasingly becoming the primary driving force for companies to adapt, fundamentally changing how they report their sustainability ambitions, strategies, and actions.

Sustainability reporting is shifting from ‘differentiation’ to ‘regulation’

Before compliance took centre stage, sustainability and ESG offered greater potential as a differentiator and value creation tool. Unilever, for instance, set out a bold and ambitious sustainability strategy about 15 years ago which has become integral to their brand. Their ‘Sustainable Living Plan’ [1] served as a blueprint for its sustainable business model, setting numerous ambitious targets and commitments. However, recent years have seen a significant scale back of these ambitious targets in their reporting, shifting towards a more pragmatic ‘Growth Action plan’ [2]. Similarly, BP [3] which leveraged ambitious goals to help establish a leadership position in the transition to renewable energy, has reduced its commitment in response to the current investor climate.

Previously companies used to invest in compelling narratives in their sustainability reports to inspire and engage with stakeholders. However, the rise of more stringent regulations, anti-ESG investors, and fear of greenwashing accusations have led companies to take a more cautious approach in recent years. On top of this, the demand for standardisation, comparability, and transparency is also shifting the emphasis from storytelling to reliable ESG data. While market practices for CSRD-compliant reporting are still evolving, there are some distinct ‘themes’ emerging from the first wave of reports.

Is compliance inadvertently replacing authentic storytelling?

Report lengths:

The first thing that jumps out is the sheer length of CSRD sustainability statements, driven by extensive data points and compliance-mandated narratives surrounding material issues. An analysis of early CSRD reporters by APCO [4] indicates the average length of around 97 pages, with 70% of businesses increasing their report in length. Early insights from Cooley also highlighted an average year-on-year page increase of 32% [5] as companies provide more detailed accounts of materiality assessments, policies, and ESG data.

Structure & presentation:

Our initial observation indicates uniform content structures across early reports, driven by CSRD requirements. The push for AI-friendly, digital tagging of sustainability data is compelling companies to adopt more consistent and standardised formats. While standardisation is prevalent, some research [6] shows a growing trend around the use of high-quality visuals and interactive PDF formats in an effort to make the information more accessible and digestible.

Balancing data and story:

Despite the varying report quality, many reports are generally lacking engaging storytelling. As SB+CO [7] insights indicate, many companies are finding it challenging to balance the mandatory requirements with their storytelling. While compliance is essential in preventing vague sustainability claims that are not grounded in concrete data, it can inadvertently create a ‘trade-off’, hindering effective and engaging sustainability storytelling. Excessive data and over-emphasis on mandated statements could risk the loss of storytelling and diminishing stakeholder connection.

However, we’ve also seen some early reporters that are managing to balance both compliance and storytelling. Rockwool’s [8] CSRD statement, for instance, includes a visual diagram that illustrates their high-priority areas and underlying goals that link back to the overarching purpose, conveying a compelling and digestible strategic vision. Ingka Group’s [9] CSRD statement also effectively prioritises key areas with a strong narrative - one that clearly articulates their strategic vision and connects it to tangible actions in an easily digestible format - while also fulfilling extensive disclosure obligations.

As compliance overshadows impactful storytelling, companies may choose to create two distinct reporting / communications strategies: one for ESG compliance, focused on complying with regulatory requirements vs. another for broader sustainability, designed to engage and inspire stakeholders. However, this separation could risk creating a disconnect between data and narrative - one that is purely compliance-based may lack authenticity, while the other may be seen as lacking concrete evidence. True accountability and authenticity demand alignment between reporting and communications.

Storytelling and narrative still matter in sustainability reporting

In the age of sustainability compliance, authentic and engaging storytelling still matters. When substantiated with concrete evidence and data, compelling narratives are more effective in capturing the attention of stakeholders, inspiring action, driving positive change, and building a strong understanding and support for sustainability initiatives. Stakeholders’ buy-in will become more critical than ever in the current divisive political landscape.

Compliance remains essential, but it alone doesn’t always tell the whole story. Lack of storytelling means missing critical opportunities to build connections and foster trust, both within and beyond the organisation.

With regulations in flux in the US, and the EU’s omnibus package under review, companies have a window to strategically refine their reporting approach. However, they must also navigate the complex landscape of conflicting stakeholder needs. Therefore, companies must seize this opportunity to think beyond mere compliance, and develop a balanced reporting approach that integrates robust data with compelling storytelling to create truly meaningful and impactful narratives on sustainability.