Emerging Drivers and Trends in Sustainability Compliance

23 May 2024

Climate change poses a significant threat globally with carbon emissions continuing to rise annually. With the demand for climate action increasing, the UK government became the first major economy to pass legislation formalising their commitment to net zero by 2050.

As a result, many organisations are experiencing increasing pressures to be more transparent on their carbon footprint through reporting measures and improve their wider sustainability performance through ESG (environmental, social, and governance) factors.

It is no surprise that compliance has a large part to play in this and is often sought through a variety of internationally recognised standards and specifications. From the well-established ISO management system standards around energy and environment, to carbon verifications, to social topics on anti-bribery and mental health in the workplace.

See NQA's full ESG compliance solutions here

Whilst no industry or organisation is the same, there can be many synergies drawn with regards to the overarching drivers leading to sustainability compliance. For some, there are mandatory factors leading to action, whereas for others there are varying voluntary measures promoting movement. This blog will consider some of the top mandatory and voluntary influences on sustainability compliance.

Mandatory drivers

In recent years, sustainability compliance has evolved from a ‘nice-to-have’ to a ‘need-to-have’ as it feeds into many businesses’ corporate strategy as a critical factor for long-term success. Organisations must navigate environmental legislation, increasing regulatory pressures, and demands for transparency from stakeholders. Such mandatory compliance is in place to mitigate environmental impact, promote social responsibility, and ensure robust governance practices.

See below some of the top mandatory drivers for sustainability related compliance:

⇒ Large organisations, based on turnover, assets, or employees, are mandated to report on carbon emissions through the UK Streamlined Energy and Carbon Reporting (SECR) policy.

⇒ The UK government released a procurement policy note (PPN 06/21) enforcing procurement companies bidding on large government contracts, accounting to £5 million per annum or above, to report and reduce carbon emissions. Find out more.

⇒ The NHS is the first health system to embed net zero into legislation, meaning NHS suppliers are required to meet the criteria within the NHS Net Zero Roadmap.

⇒ National Highways have released five client carbon commitments to reduce consumption, one of the commitments includes the adoption of PAS 2080:2023 as a common standard across contractors and sub-contractors within the industry. Find out more.

⇒ The Energy Savings Opportunity Scheme (ESOS) is a mandatory energy assessment scheme for organisations in the UK that meet a qualification criteria based on employee count, or annual turnover.

⇒ Many organisations are increasingly experiencing requirements at the point of formal tender to disclose information around carbon and wider sustainability reporting, for example carbon footprint figures and social responsibility initiatives.

Voluntary Drivers

In a changing environment, forward-thinking organisations and individuals pave the way toward a more sustainable future. With many proactively taking action on carbon and sustainability issues, their commitment drives long-term success and setting the standard for others to follow.

There are a number of attributing factors driving voluntary sustainability compliance, see below some of the top points:

⇒ Reputation - Channelling sustainability through an organisation is often associated with innovation and leadership which can enhance business reputation. Not only this, but sustainability compliance can also act as a safety mechanism to protect brand from the risk of greenwashing.

⇒ Competitive advantage - In competitive markets, sustainability is a notable factor which can differentiate one organisation from another. Conformity to an internationally recognised standard adds credibility which can attract potential clients and investors.

⇒ Ethical responsibilities - As well as the moral responsibility incumbent upon individuals and organisations in driving sustainable progress, there can be business benefits as a result. Practicing sustainability within a company can support with talent attraction and employee engagement.

⇒ Supply chain relationships - In order to align with their own internal sustainability goals, many suppliers and partners will opt to engage with organisations with stronger sustainability credentials.

⇒ Risk management - Organisations with increased control on systems and processes through compliance are better placed to handle crises. Additionally, sustainability compliance can help to mitigate the risk of future compliance and policy requirements.

In summary, the landscape of sustainability compliance is rapidly evolving as a result of both mandatory and voluntary drivers to organisations. It is critical for long-term success that companies not only meet the requirements mandated on them but embrace sustainability as a core strategic priority for the business.

Set yourself ahead and find out more about how NQA can support you with your sustainability ambitions today.

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