By: Paul Holland, Poppy Suthon
16 Jul 2026 7 min read
Sustainability reporting has moved from the margins to the mainstream. What was previously a largely voluntary, narrative disclosure exercise managed by sustainability teams is now becoming a data-driven discipline, embedded in annual reporting cycles, and attracting the same level of scrutiny as financial statements.
For many CFOs and Finance Directors, this shift is creating heightened expectations and accountability. They are being asked to ensure that sustainability data - data they do not yet fully control - is not only disclosed, but robust, consistent and fit for decision-making. The systems, processes and governance frameworks that underpin financial reporting have not yet been fully replicated for sustainability data, and that gap is becoming more visible.
The FRC’s thematic reviews are already identifying deficiencies in climate disclosures - including gaps between what organisations say in their narrative reporting and what their financial statements show. Financial auditors are following. The scope of what must be disclosed, and stood behind, keeps growing.
These developments are exposing weaknesses in data management processes that were not originally designed to withstand this level of scrutiny.
Your sustainability data will be challenged by auditors, regulators and investors. The question is whether it’s ready.
The UK’s regulatory framework for sustainability reporting has expanded significantly - and more standards are coming. From the Task Force on Climate-related Financial Disclosures (TCFD) and the Streamlined Energy and Carbon Reporting (SECR) requirements to the incoming UK Sustainability Reporting Standards (UK SRS), the scope of what organisations must disclose, and stand behind, keeps growing.
For organisations operating internationally, the EU’s Corporate Sustainability Reporting Directive (CSRD) adds another layer of complexity. Many UK companies with significant EU activities will fall within scope in the near term.
The FRC has been clear in its expectations. Its thematic reviews have consistently identified deficiencies in climate-related financial disclosures, including misalignment between narrative reporting and the financial statements. This level of regulatory and audit scrutiny is only increasing and is bringing existing weaknesses in sustainability data management into sharper focus.
Climate-related risks, carbon emissions and other sustainability topics and metrics are increasingly influencing financial statements, including asset valuations, provisions and disclosures. Sustainability is no longer a peripheral consideration.
Financial auditors are scrutinising sustainability topics, matters and risks more closely, assessing how they affect the accounts and whether there is proper connectivity between the front-end sustainability disclosures and the back-end financial statements. Inconsistencies between the two are increasingly a focus of audit and regulator challenge.
This shift is also changing the role of the finance function. Finance teams are taking a more active role in overseeing sustainability reporting, working closely with sustainability teams to ensure data is complete, consistently prepared and appropriately controlled.
For CFOs and Finance Directors, this is a new kind of exposure. You are being held accountable for data your team didn’t collect, using systems your team didn’t design. It is no longer enough to report sustainability metrics. Organisations must be able to demonstrate how data is collected, calculated and controlled, and why it is credible. This requires robust data governance and, increasingly, independent assurance.
Unlike financial data, which benefits from well-established frameworks, mature processes and years of refinement, sustainability data is often still evolving. In practice, many organisations face challenges including inconsistent definitions, fragmented data sources, manual processes and limited documentation of methodologies. These gaps produce errors, inconsistencies and data that cannot be reliably compared year on year.
Weaknesses in governance can have significant consequences:
Addressing these risks requires clear ownership of sustainability data, supported by defined roles and responsibilities across finance, sustainability and operational teams.
One of the most common challenges we see is the disconnect between sustainability and finance teams. Sustainability data is often generated outside the finance function, using different systems and processes. Bridging this gap means integrating sustainability into financial reporting cycles, applying finance-grade controls and governance to sustainability data, and ensuring consistency across all disclosures.
Internal controls over sustainability data should increasingly mirror those applied to financial reporting, including documented processes, audit trails and regular review. Embedding these behaviours helps drive consistency, reduce risk and improve overall data integrity.
Sustainability assurance is playing an important role. Delivered in line with recognised standards - such as ISAE 3000, ISAE 3410 and the newly released ISSA 5000 - assurance gives stakeholders more confidence that reported information is relevant, complete and accurate.
The assurance report is not the point. What matters is that assurance highlights gaps and opportunities for improvement in governance, processes and controls before they become real challenges.
For organisations subject to, or preparing for, mandatory reporting requirements, assurance provides a credible foundation for public disclosures and commitments. Engaging an assurance provider can help organisations embed good practices, reduce the risk of challenge, and avoid more costly remediation or reputational issues as regulatory, audit and general scrutiny continue to increase.
The organisations best placed to meet rising expectations are those investing now in the underlying infrastructure of good sustainability reporting.
The consequences of poor data quality are no longer remote. Regulatory challenge, audit complications and reputational damage are real and increasing risks. The CFOs best placed to manage them are already treating sustainability data governance as a finance-function priority.
The organisations that get this right will do more than meet their reporting obligations. They will be better placed to protect their reputation, make better decisions, and build genuine confidence with investors, regulators and the public.
We work with businesses at every stage of their reporting journey, from those reporting and obtaining sustainability assurance for the first time, to those who have been reporting for over a decade. We know where the gaps are, because we see the same ones repeatedly. Our work goes beyond the assurance opinion, we provide relevant actionable feedback throughout the engagement to support continuous improvement in your reporting.
If you want to understand where your sustainability data governance stands - or find an assurance provider that combines rigour with practical insight into what good looks like - we'd welcome the conversation.
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