Towards Effective Environmental Reporting: Four Takeaways for Sri Lankan Companies

By Medhini Igoor

In today’s corporate landscape, environmental reporting is no longer just a compliance exercise - it is a strategic necessity. As Sri Lanka navigates economic recovery, businesses are increasingly recognizing the value of environmental disclosures. These reports enhance corporate accountability, attract sustainable investments, and align with global demands and climate goals. Effective environmental reporting can drive corporate behavior and support Sri Lanka’s transition to a greener, climate-resilient economy. However, many organisations in the country are underprepared, viewing reporting as a tick-box exercise rather than a tool for meaningful impact. For environmental disclosures to drive real change, companies must integrate sustainability into their operations.?

As environmental disclosures become an integral part of corporate strategy, certain organisational factors stand out as crucial drivers of its successful implementation. Here are four takeaways for Sri Lankan companies looking to build stronger organisational capacity for effective environmental reporting.

1. Top Management Must Champion Sustainability

Leadership commitment is crucial for integrating sustainability into business decisions. To move beyond compliance, companies must ensure sustainability is a core part of boardroom discussions.

• When sustainability is prioritised by the board, it ensures that these values permeate throughout the company, with clear sustainability goals and key performance indicators (KPIs) cascading from board members down to managers and staff.?
• Companies where sustainability teams regularly present to the board have made significant strides in sustainability integration.?
• Some experts argue that driving real impact requires sustainability professionals to be part of the board.?

2. A Skilled Sustainability Team is a Game-Changer

Organizations that invest in qualified ESG professionals and prioritize ongoing training develop a comprehensive understanding of sustainability, enabling them to implement effective strategies and reporting. In contrast, companies lacking dedicated sustainability teams often exhibit a superficial grasp of the subject, focusing on isolated initiatives such as tree-planting and beach clean-ups, without achieving long-term impact.?

A well trained sustainability team can:

• transform ad-hoc CSR initiatives into cohesive business and operational strategies.
• strengthen data collection and management, ensuring reporting is accurate and reflective of real operational changes, minimizing reliance on external consultants who may lack context- and company-specific insights.?
• understand the broader business and economic rationale behind sustainability practices, including cost reduction, lower environmental footprints, and improved employee retention.?
• recognise gaps in their organisation’s sustainability efforts and acknowledge the work still needed to achieve meaningful progress and impact.

3. Cross-Departmental Collaboration is Key

Environmental reporting is not just the responsibility of one team - it requires collaboration across departments. Finance, operations, procurement and sustainability teams must align on data collection, risk assessment, and long-term strategy. Such collaboration requires investing in capacity building of not just the sustainability team, but also across departments. This not only ensures effective reporting but also embeds sustainability deeper into the organisational culture.

One of the main obstacles is the disconnect between sustainability and finance teams. While financial reporting is a well-established practice for companies, non-financial reporting remains less prioritised and is often treated as an afterthought. The key to overcoming this is framing environmental risks as financial risks. When sustainability is tied to business resilience and profitability, buy-in from finance teams becomes easier.

4. Leveraging External Expertise and Resources

Effective sustainability reporting requires a balanced approach between in-house responsibilities and external support. While internal sustainability teams manage the core tasks of reporting, external organisations can play a complementary role.?

These consulting organisations:

• Offer regulatory guidance (both local and international) helping companies navigate the complex and evolving landscape of environmental standards.?
• Provide assurance and data verification services to enhance the credibility of sustainability reports.
• Offer insights into best practices and help companies align with global frameworks.
• Provide advanced tools and software solutions to streamline reporting processes.

Industry associations and government bodies, particularly the Ministry of Environment, play a pivotal role in supporting SMEs. They can offer subsidized training programs, technical guides, and accessible resources for smaller businesses that form the majority of the local supply chains for larger companies. Such resources and support can help SMEs overcome barriers to data collection and management, and contribute to broader corporate environmental goals.

Looking Ahead: The Need for a Cultural Shift

As Sri Lanka is transitioning towards mandatory sustainability reporting with the adoption of the Sri Lanka Financial Reporting Standards (SLFRS S1 and S2), companies must shift their perspective - seeing disclosures not as a burden but as an opportunity to build resilience, attract investors, and drive meaningful change. Companies that integrate sustainability into their core strategy will not only enhance transparency and accountability, but also position themselves as industry leaders in a rapidly evolving global economy.

Medhini Igoor is a Researcher at CSF. Read more on the complexities of reporting and strategic interventions in CSF’s latest research brief titled, ‘Acronyms and Accountability: Strategic Insights on Corporate Environmental Disclosures in Sri Lanka’. https://www.csf-asia.org/new-report-strategic-insights-on-corporate-environmental-disclosures-in-sri-lanka/