A decade ago, publishing a sustainability report was a mark of distinction — something that set a company apart. Today, it has become table stakes. KPMG's global survey shows that across the world's largest 250 companies, the reporting rate has climbed to an all-time high. But the story behind that headline number is more complicated, and more instructive, than it first appears.
The Rise of the Universal Baseline
Sustainability reporting is no longer the domain of large multinationals with dedicated ESG teams and communications budgets. The practice has spread rapidly down the company-size spectrum and across geographies. In many markets, mid-sized companies now report at rates that rival those of large-cap peers from just a decade prior.
What's driving this? Three forces are at work simultaneously. First, regulatory pressure — most notably from the EU's Corporate Sustainability Reporting Directive (CSRD) — is transforming voluntary disclosure into a legal requirement for a growing share of companies. Second, investor demand has intensified, with major asset managers routinely requesting ESG data before making allocation decisions. Third, and perhaps most durably, customers, employees, and business partners have begun treating sustainability credentials as part of their procurement and employment decisions.
The Quality Gap
Yet quantity doesn't equal quality. While report publication rates have soared, independent assurance — where an external auditor verifies the data — remains the exception rather than the rule outside of Europe. For companies publishing sustainability data without assurance, there is little accountability for accuracy. Numbers can be selectively disclosed, methodologies can shift year to year, and material risks can be buried in footnotes.
"If investors and stakeholders can't trust that disclosed data is accurate and comparable, the entire edifice of ESG-based decision making weakens."
This creates a credibility problem for the market as a whole. The move toward mandatory reporting standards — particularly the European Sustainability Reporting Standards (ESRS) — is a direct response to this problem.
Framework Fragmentation
Another persistent challenge is the proliferation of reporting frameworks. Companies face a landscape that includes GRI, TCFD, CDP, SASB, ESRS, and a host of sector-specific schemes. Many companies report to multiple frameworks simultaneously, which creates duplication and complexity without necessarily improving the usefulness of the information produced.
Convergence is happening, but slowly. The International Sustainability Standards Board (ISSB) has made progress toward a global baseline, and the EU's ESRS standards have been developed with interoperability in mind. For companies caught in the middle today, the practical reality is still one of managing multiple reporting tracks.
What Best-in-Class Looks Like
High-performing sustainability reports share several characteristics. They align with recognized frameworks rather than inventing proprietary metrics. They disclose both positive and negative performance — a company that only reports improvements in one area while ignoring deterioration in another is signaling to readers that the report is more PR than substance. They are assured by an independent third party. And increasingly, they integrate sustainability data into financial reporting rather than treating it as a separate document.
Key Takeaways
- Align with recognized standards (GRI, ESRS, VSME) rather than creating proprietary metrics.
- Disclose both positive and negative performance — selective reporting erodes trust.
- Pursue third-party assurance to strengthen credibility with investors and regulators.
- Treat sustainability reporting as continuous data management, not an annual exercise.
The Implication for SMEs
Smaller companies often feel that global sustainability reporting trends don't apply to them. That view is becoming increasingly hard to sustain. Value chain reporting requirements — which require large companies to gather ESG data from their suppliers — are pulling SMEs into the reporting ecosystem even if they are not directly covered by regulations like CSRD.
For SMEs, the most practical response is not to attempt to replicate the full reporting apparatus of a large company, but to establish clean data collection habits now, align with a simplified framework such as the VSME standard, and build internal literacy around what the data means and why it matters.
Source
This article draws on findings from KPMG's Survey of Sustainability Reporting 2022, which analyzed reporting practices across the world's largest 250 and top 100 companies in 58 countries.
