How often do we have all the information to make the right choice, yet incomprehensibly decide not to follow suit? Our world is littered with examples of this pattern of human behaviour. We knew that going to a social gathering during the pandemic would increase transmissions, but we also needed to have regular social contact. We know that saving €400 for retirement goes a long way, but we also need to escape the winter with a trip to Barcelona. We know that excessive flying negatively affects the planet, but we need to see the world, go to a conference, or see our favourite artist perform.

It would seem that information alone isn’t enough to make the difference. But it can definitely have a big effect. Rachel Carson, an American marine biologist, published a book in 1962 called Silent Spring that documented the environmental damage caused by the use of a pesticide called DDT. Her work swayed public opinion so much that the government decided to ban the use of DDT for agricultural uses. It also caused the creation of the US Environmental Protection Agency and sparked the modern environmental movement as we know it. Information therefore does have the potential to transform our world.

Arguably, we are better informed about the effects of climate change than ever before. There is an avalanche of scientific papers and corporate sustainability reports diligently calculating the CO2e (carbon dioxide equivalents) of our actions, a number which is steadily ticking up to reach peak emissions. Sustainability reports have been getting longer and longer, now averaging 83 pages. But what is the use of more corporate reporting on sustainability if having more information doesn’t actually change our behaviour?

There is a running debate on this issue. Being transparent arguably leads to business value through accountability and mitigation of greenwashing risk. As a result, we should see corporate value going up, as investors and consumers have more confidence in the company and its long-term success. The logic being: If investors had more sustainability information available, they would allocate investments towards sustainable companies. This in turn would incentivise companies to do more on sustainability, subsequently creating more investment and generating a virtuous cycle. Reporting on sustainability information would therefore be the catalyst for progress.

But critics say it doesn’t work, since global trends aren’t changing accordingly. The arguments are that global emissions and social inequities have steadily risen, and we have lost species at an unprecedented rate. The increased amount of reporting seems to have made little difference. Critics also say that reporting has become an end in and of itself, whereby companies focus on speaking about the action, rather than taking action.

According to the Sustainable Business Tracker Report sustainability professionals allocate between 25-50% of their time to reporting and disclosure. A SustainAbility survey discovered that corporate issuers are spending $533,000 annually on climate-related disclosure, while institutional investors are spending an average of $1,372,000 annually to collect, analyze, and report climate data to inform their investment decisions. Critics argue that spending all this time and money on reporting could just as well have been dedicated to action in the first place.

Currently the requirements for sustainability reporting have only been growing. As part of the European Green Deal, the European Union has required companies to report on their social and environmental impact under the Corporate Sustainability Reporting Directive (CSRD). Given the recent developments of the Omnibus Proposal, companies will be required to disclose under CSRD if they have an average of more than 1,000 employees and surpass at least one of these thresholds (1) an annual net turnover exceeding 50,000,000€ or (2) a balance sheet above 25,000,0000€. Companies that fall below these limits can choose to voluntarily comply with these rules.

Once these companies start reporting under CSRD, investors will be able to compare them based on their performance on individual sustainability topics. In complying with the CSRD, companies need to follow the European Sustainability Reporting Standards (ESRS). When companies report their impacts, risks and dependencies on various material topical standards (such as E4 on Biodiversity) investors can compare their performance and allocate capital accordingly.

Companies are required to disclose their sustainability policies and actions, showing how effectively they track their efforts by disclosing metrics and showing their ambition through targets. By structuring the ESRS in this manner, it will be clear which companies have gaps in their thinking. Some companies might be taking many actions, but have no policy to manage their impact. Others might have policies in place, but few actions and no way of measuring if what they’re doing makes a difference. The maturity of companies’ sustainability efforts will thus become clearer, revealing which companies walk the talk and which companies just talk.

Once sustainability information is publicly disclosed, it will allow governments, investors and civil society to use it. What they will use it for is what will make the difference. If investors start penalizing underperforming companies, competitors can gain an edge. If governments see companies provide a comprehensive action plan with clear metrics, they might just make it the new standard. In any case, the information companies present in the coming months provides the potential for change. Whether that change materialises, or whether the critics will have a field day, depends on the actions we decide to take.