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Companies are facing a fast-moving wave of sustainability reporting requirements — from California’s climate disclosure laws to the European Union’s Corporate Sustainability Reporting Directive (CSRD). Each carries different scope, timelines and requirements, and they significantly expand the data companies must collect, analyze and report. The underlying expectation is clear: Sustainability information should be prepared with the same rigor applied to financial reporting.
Yet many regulatory specifics are evolving or remain unsettled. In Europe, the omnibus package has narrowed the CSRD’s scope, simplified reporting requirements and delayed some deadlines. The California Air Resources Board (CARB) — the state agency tasked with responsibility for rulemaking development, implementation and enforcement — is still discussing how to define key terms such as “revenue” and “doing business in California,” which may impact which companies are in scope. If you wait for complete clarity on how to comply with these regulations, your company risks finding itself with little time to prepare, forcing costly, last-minute efforts to meet deadlines.
At the same time, all this uncertainty creates a limited but valuable window of opportunity. By putting strong internal controls in place now — strengthening governance, clarifying roles and building scalable, assurance-ready processes — your company can prepare for evolving requirements across multiple jurisdictions. Those that move early will not only meet regulatory demands and create interoperable reporting capabilities, but they can also then leverage sustainability data to sharpen insights, guide investment decisions and capture long-term value. PwC’s Global CSRD Survey 2025 underscores the point: 70% of the executives responding told us they’re gaining moderate or significant business value from sustainability data beyond compliance.
The takeaway is clear. Strong internal controls can reduce compliance risk and transform reporting into a foundation for long-term competitive advantage.
Sustainability reporting The three benefits of internal controls over sustainability reporting
Sustainability reporting is entering a new era, one that’s regulated, assured and subject to growing stakeholder scrutiny. This is a pivotal moment. New mandates are introducing independent assurance requirements and, even when not mandated, regulators and investors expect high-quality disclosures.
CFOs, ESG controllers and other finance function leaders are uniquely positioned to lead this effort. Drawing on deep experience with financial reporting controls, finance leaders can adapt established reporting frameworks to sustainability data, driving consistency, clarity and confidence in disclosures.
PwC has identified three key benefits of internal controls for sustainability reporting.
Sustainability data A risk-based approach to prioritizing sustainability metrics
For many companies, the toughest question is not whether to strengthen internal controls, but where to start. The sheer scope of sustainability reporting can feel overwhelming. Trying to implement controls across every metric at once is neither practical nor efficient.
When trying to bring order to this complexity, consider applying a risk-based approach that allows resources to be directed to the metrics that matter most — those under regulatory scrutiny, those vulnerable to misstatement or those essential to investor confidence. A three-phased approach can help companies focus on where the risk is highest, helping them build credibility.
Phase 1 – Secure the high-risk metrics
Begin with disclosures most likely to attract regulatory or assurance focus like Scope 1, 2 and 3 greenhouse gas emissions, waste generated in operations and human capital indicators such as safety and turnover. These areas often involve complex estimation, multiple data owners across the value chain and reliance on manual inputs. Establish foundational controls such as boundary checks, documentation of assumptions and management reviews. These early wins can stabilize the reporting environment and set the tone for accountability across your business.
Phase 2 – Expand and enhance with technology
Once the high-risk metrics are under control, broaden coverage to moderate-risk areas and strengthen the reliability of existing controls. This is where technology pays off. Automated system validations can flag incomplete data, AI can detect anomalies in emissions factors and workflow tools can track approvals and evidence. These enhancements will help reduce manual effort, cut error rates and free up teams for more strategic work.
Phase 3 – Formalize monitoring, testing and refinement
Over time, your controls should cover the full landscape of sustainability metrics. This phase embeds sustainability controls into your broader control framework with ongoing monitoring, testing and refinement. The compliance and risk functions or internal audit can incorporate sustainability into its annual plan, while AI and automation support continuous monitoring. You’re looking for a scalable, resilient framework ready to help your company adapt as regulations evolve and as investor expectations rise.
Sustainability strategy Six moves to turn today’s window of opportunity into tomorrow’s advantage
The countdown is underway. Some regulatory timelines may feel distant. Others are quickly approaching. But your company’s leadership should understand that the effort needed to build reliable reporting and assurance-ready controls is significant. Many are still piecing together data collection processes and key systems. The risk of waiting is clear: once final requirements are set, there will be little time to design, test and embed the processes that regulators, investors and other stakeholders will expect.
We suggest making the following moves to build a durable sustainability reporting foundation.
Internal controls Controls that power growth, decisions and market confidence
Internal controls are no longer just a safeguard. They’re a business enabler. When well-designed, they reduce errors, support independent third-party assurance and inform better decisions by providing visibility into risks, inefficiencies and improvement opportunities. The result is more than compliance. It’s sharper insights, stronger decisions and a durable advantage in a marketplace where sustainability performance is increasingly tied to financial success.
Sustainability and ESG services
PwC can help you build a reporting strategy
Sustainability reporting
Key insights on global sustainability regulations
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