Sustainability reporting: Still a work in progress

Imagine the world’s first magical to-do list: Add one item to it, and a few others automatically get marked complete at the same time.

Here’s the thing: It’s not totally magic. In fact, it’s what your to-do list might look like if you start viewing sustainability efforts and capital strategy as connected parts of a puzzle rather than treating them as separate entities.

We talked with PwC’s sustainability assurance services leader, Kevin O’Connell, about the changes in the regulatory climate, how finance chiefs can better integrate sustainability into broader business decisions, and the use of AI in sustainability efforts by companies and stakeholders.

This interview has been lightly edited for length and clarity.

It’d be helpful to start by taking a step back to get some context on climate disclosure rules more broadly, especially how they’ve changed. What does the regulatory apparatus look like in 2026?

What’s happened in the regulatory reporting environment is I think we’re getting to a point now where there’s much more clarity than there was obviously two years ago, right when [the] Omnibus [package, the European Commission’s streamlining of the Corporate Sustainability Directive] came in.

From a US multinational CFO perspective, probably the biggest rule they’re focused on is the [corporate sustainability reporting] rules coming out of Europe. Those rules are broad and expansive. The Omnibus requirements that they put in have obviously reduced the number of companies in scope…but most of our large clients are still in the scope of that rule.

A lot of the complex topics and things that you need to do are still in those rules. You still need to do a double materiality assessment. You still need to disclose environmental and workforce metrics, so there still is a lot of work to be done in that area. [It’s] come to a point where there’s now clarity and clients are moving forward to address those rules.

Why aren’t more CFOs integrating sustainability into strategy? What might it take to get more companies on the bandwagon?

Certainly as we think about it, there’s probably not a common framework yet in terms of how to calculate a return on investment for some of these sustainability factors. That’s one of the things that we’re focused on.

The other piece really is the completeness and accuracy, and maybe even availability, of all the data that you would need to make these decisions. That’s getting better as folks are needing to collect and report on this information from a regulatory reporting perspective.

We’ve been doing financial reporting for [approximately 100] years. While [sustainability reporting] certainly has been around for a while from a voluntary reporting perspective, from a mandatory, regulatory reporting [perspective], it’s probably only the last five years. There is a lot of work to do around putting in proper measurement systems to be able to capture and report on the data accurately.

In your report about integrating AI and sustainability, you mentioned how some stakeholders are using AI to get into inconsistencies between climate commitments and actions.

It’s a very interesting use. They’re using AI to essentially scan and model whether or not these companies can meet the targets that they set. A lot of those targets are coming due in 2030. There’s definitely a focus on potentially companies reset[ting] their sustainability targets.

The other interesting use that we’ve seen companies use is using essentially AI to perform a stakeholder analysis. So if you train AI to be a board member or an institutional investor or one of your significant customers or your employees, you can essentially role play how certain issues or changes to your sustainability targets might be reflected in the market or what their perspectives would be. It’s been a really interesting way to get feedback on the things that companies want to do.