'Total Reporting': EY's Value-Driven Approach to ESG Reports

EY has introduced Total Reporting, an integrated approach to sustainability disclosure, as companies prepare for anticipated UK reporting standards that will expose disconnected approaches to environmental and social governance.

Rebecca Donnellan, Partner at EY, hosted 35 companies at a workshop event on Friday to introduce the framework, which addresses growing concerns about the gap between stated sustainability commitments and operational reality.

"We know companies are looking for a better way to approach their sustainability data and reporting," Rebecca said following the event.

"That’s why we’ve created Total Reporting, an integrated, value-driven approach to reporting. On Friday we welcomed 35 companies to our workshop event to share our market insights and discuss among peers.

"One ‘eureka’ moment for me is that companies are reflecting more deeply on their individual company business cases of sustainability."

The integration challenge

The initiative comes as EY research reveals significant inconsistencies in how FTSE 350 companies communicate sustainability priorities across different stakeholder audiences.

Of companies that included non-financial key performance indicators in their annual reports, 50% omitted these same metrics from year-end investor presentations, according to EY's analysis.

"Too many disclosures treat business model descriptions as static diagrams, whereas the 'sustainability pillar' operates in isolation from other strategic priorities," the firm's recent research paper stated.

The UK government is currently assessing sustainability reporting standards for potential application.

Once finalised, the government and Financial Conduct Authority will decide whether to mandate their use and determine the scope of affected companies.

Focus and materiality

Rebecca highlighted a shift in corporate thinking at the workshop, noting that companies face pressure to demonstrate clearer return on investment from sustainability initiatives.

"With so many acute pressures facing companies today, there is a need for clearer communication on ROI and impact to keep momentum," she explains.

The Total Reporting framework emphasises strategic focus over comprehensive coverage of sustainability topics.

"We all need to focus on what matters most, trying to cover too many topics as material obscures focus from where you can make most impact," Rebecca added.

Exposing disconnected thinking

EY's analysis suggests the forthcoming standards will distinguish between companies that have genuinely embedded sustainability into strategy and those treating it primarily as compliance.

"These standards won't just change disclosure requirements. They will expose the difference between companies that have genuinely integrated sustainability into their strategy and those that have been approaching it with less commitment, mainly as a box-ticking exercise," according to EY research authored by Maria Kępa, Director of Governance and Public Policy at EY, and Mala Shah-Coulon, Associate Partner at EY.

The research reveals that companies disclose an average of six financial and four non-financial KPIs, but metric selection quality varies significantly.

Some organisations label all environmental and social data points as KPIs without demonstrating connection to strategic decision-making.

Strategic alignment

The new reporting framework addresses what EY identifies as a fundamental challenge in current corporate disclosure.

"The question isn't whether your company can produce an annual report that meets technical requirements. It's whether your integrated reporting about your business model, operating model, strategy and related performance metrics truly reflects the reality of how leadership manages the business," EY's research states.

EY recommends that companies align narratives across all stakeholder communications, with capital allocation decisions revealing genuine priorities.

"Report on sustainability only to the extent it genuinely matters to business performance," the firm advises.

The Total Reporting approach aims to help companies demonstrate authentic integration before mandatory standards potentially expose strategic incoherence.