Almost half of companies (46) in the FTSE 100 made adjustments to their previously reported climate and sustainability metrics this year, according to analysis by Deloitte.
Deloitte looked at the climate and sustainability disclosures in the most recently published annual or sustainability reports to the end of 2023.
Of the restatements made, 89% related to greenhouse gas emissions (GHG) metrics, with the remainder (11%) comprised of a variety of other sustainability topics (including waste, water, diversity & inclusion, and health & safety).
Some 32% of all restatements related to scope 3 metrics – indirect emissions that occur in the activities of an organisation (including business travel, commuting, purchased goods and waste disposal).
A significant number of environmental, social and governance (ESG) metrics reported and published last year by the UK’s largest companies have since been updated, explained Steve Farrell, partner and head of sustainability assurance at Deloitte. The changes were “either because measurements have evolved, or worryingly, because they were incorrect to begin with”, he added.
The most frequent reason for restatements related to a change in method or measurement approach (44%) – an acceptable practice for GHGs under the GHG protocol. The second most frequent reason was the correction of errors (29%).
Scope 3 emissions across food companies are proving particularly problematic to nail down for food companies. Measurements can be inaccurate if there is for example limited data available from suppliers, but as the granularity of data improves so the figures reported can change. As Footprint has reported, this can result in scope 3 emissions falling – or rising.
From greenhouse gas emissions to food waste, workforce diversity to pay gaps – companies must increasingly report metrics beyond their financial information. Trust in the numbers is not high.
Farrell said Deloitte’s findings “could indicate that quality and rigour around non-financial reporting is improving, [but] it equally demonstrates the volatility of ESG reporting in the market today. With the introduction of a new regulatory framework for sustainability reporting – which some firms will report against in December 2024 – the market should expect to see even more adjustments, across an even broader range of metrics, appearing in UK plc reports,” he added.
Known as the Corporate Sustainability Reporting Directive (CSRD), impacted companies will be expected to report on a wide range of material qualitative and quantitative environmental, social and governance disclosures from financial years starting as early as on or after January 1st 2024. The regulation is mandatory for impacted firms, and its reach encompasses large PLCs down to private UK companies with operations in the EU.
