Article by Charles Assaf, CEO and Co-founder, Novisto
A company can publish a polished sustainability report and still be unable to tell its CFO which numbers are defensible under assurance. This fact has led to the “CFO-ization” of sustainability: embedding the discipline of financial management into ESG practices. This means implementing robust internal controls, establishing clear ownership of data, creating sustainability “close” processes that mirror financial ones, and ensuring that information is ready for external assurance. Regardless of political trends or evolving messaging around the subject, sustainability is not becoming less important. Instead, it’s moving from a communications process into the corporate operating model.
However, this transition is far more complex than it appears on the surface. While headlines frequently point to a linear progression toward universal standards and uniform investor demands, the reality on the ground is a multi-speed, multi-directional environment. It is being continuously reshaped by geopolitical shifts, regulatory recalibrations, and the evolving priorities of the capital markets. For corporate leaders, navigating this new reality requires moving beyond a pure compliance mindset. It is about recognizing how different stakeholders demand decision-useful data to dictate access to capital, define competitive advantage, and ensure long-term enterprise resilience.
Investor Pressures and the Confidence Crisis
According to a recent PwC Global Investor Survey, 76% of investors state that they trust corporate sustainability information only if it has been externally assured.
This skepticism is a direct market response to widespread greenwashing, but the demand for rigor is not just an ethical crusade—it is fundamentally about financial materiality. Institutional investors recognize that climate-related physical risks, human capital management, and supply chain fragility are undeniable drivers of enterprise value.
However, “investor pressure” is not a monolith. To understand what is actually happening in the market, corporate leaders must distinguish between three distinct channels of demand:
- Regulatory Demand: This is the baseline compliance layer. We are seeing a historic push for standardized disclosures through the Corporate Sustainability Reporting Directive (CSRD) in Europe, regulations based on the ISSB, and sweeping state-level mandates like California’s climate laws.
- Capital Market Demand: This is driven by the internal mechanics of finance. It includes asset managers incorporating sustainability factors.
- Commercial Demand: Often overlooked in mainstream headlines, this is sometimes the most immediate driver of corporate action. Suppliers are facing existential threats when being selected or excluded on the basis of sustainability performance and risk, and supply chain questionnaires are increasingly requiring them to provide robust ESG data simply to keep their contracts.
It is vital to recognize that this commercial pressure does not exist in a vacuum; it is a direct cascade of investor pressure. When institutional investors demand that a multinational enterprise reduce its Scope 3 emissions or eliminate human rights risks, they are forcing that enterprise to audit and police its entire value chain.
Consequently, tier-one enterprises are passing these demands directly down to their suppliers. For smaller or mid-market companies, “investor pressure” rarely arrives via a shareholder resolution; instead, it arrives as a mandatory sustainability questionnaire from their largest corporate customer. If you cannot provide audited, reliable data to your enterprise buyers, you risk being designed out of their supply chain entirely.
Where these three demands intersect, the financial stakes are exceptionally high. The relationship between ESG performance and the cost of capital is complex, varying by sector, time horizon, and carbon exposure.
In sectors where sustainability risks are highly financially material and closely scrutinized by lenders or long-term investors—such as manufacturing, energy, or agriculture—stronger disclosure and proactive risk management can support notably better access to capital. Conversely, companies with poor transparency present information asymmetries that obscure underlying risk, making them less attractive to tier-one capital allocators.
What We Hear Inside the World of Sustainability Management
Our direct conversations with customers, internal subject matter experts, and market participants reveal a significantly nuanced reality. The journey toward sustainable investment is a complex recalibration of priorities in an increasingly volatile world.
First, we must acknowledge that “investor pressure” is heavily fragmented. The market is not moving as one unified force. Different types of investors behave very differently based on their specific mandates:
- Institutional asset owners (like massive pension funds) care deeply about systemic, long-term climate risk and portfolio-wide resilience over a 20- to 30-year horizon.
- Passive asset managers focus heavily on standardized data for index inclusion, proxy voting, and broad engagement strategies
- Private equity firms care intensely about operational value creation, resource efficiency, and minimizing compliance risks to ensure a company is primed for a high-value exit. Sustainability data across their portfolios are in high demand by their investors, who have their own reporting obligations.
- Hedge funds will focus on sustainability data when backtesting demonstrates a direct link with returns.
In Europe, we are observing a fascinating and challenging rebalancing act that highlights a structural data gap in the market. There is incredibly strong regulatory demand via the Sustainable Finance Disclosure Regulation (SFDR) for investors to accurately classify their funds and substantiate their sustainability claims. Yet, on the corporate side, reporting requirements like the CSRD face political pushback, recalibration, and phased-in timelines to lessen the administrative burden on companies. This creates a critical tension: investors still require investee data to meet their own regulatory obligations, even if corporate-side reporting rules are softened. As a result, companies can expect more data requests from their investors looking to fill this regulatory void.
In the US, the environment is highly politicized, leading to a phenomenon known as “greenhushing”—companies deliberately minimizing public sustainability disclosures to avoid political crossfire. However, it is a mistake to assume these companies are simply abandoning their sustainability work. Instead, they are reframing it. ESG activity is becoming less visible in public marketing branding while remaining deeply embedded in enterprise risk management, energy resilience planning, operational efficiency metrics, and supply chain continuity.
We are also witnessing a fascinating “topical recalibration.” Many of today’s most pressing mainstream global topics are, at their core, sustainability topics. Consider the explosion of Artificial Intelligence. The massive energy load and water consumption required to cool AI data centers, the cybersecurity vulnerabilities of new technologies, labor displacements due to automation, and the governance frameworks required to manage misinformation are all fundamentally sustainability issues. For investors, these are not just niche “ESG topics”—they are core enterprise risk and capital allocation issues that require strict board oversight.
To bridge the current gaps in standardized data, the market is increasingly relying on workarounds, such as AI-based data scraping and established frameworks like the S&P CSA and CDP questionnaires. However, AI scraping can amplify outdated, inconsistent, or selectively disclosed information. ESG questionnaires, meanwhile, can create reporting fatigue, causing corporate sustainability teams to spend thousands of hours manually filling out spreadsheets rather than driving actual operational change. These tools are useful stopgaps, but they are not substitutes for standardized, assured, company-owned data.
Finally, we must recognize a critical distinction: reporting sophistication does not equal resilience. A pristine sustainability report cannot mask a fragile supply chain, just as a company with strong operational sustainability practices will still face capital constraints if its disclosure systems are immature. Investors increasingly demand both. Ultimately, the operational consequence of financial-grade sustainability management is company-controlled, traceable information infrastructure—not more questionnaires or longer reports.
The Future is About Resilience Built on Bullet-proof, Audit-ready Data
The global transition toward financial-grade sustainability reporting is not a passing trend; it is permanently restructuring the information architecture that underpins global capital markets. The baseline has been set, but the path forward will continue to be characterized by regional disparities, regulatory adjustments, and evolving investment priorities.
The winners in this new era will not be the companies that simply report the most ESG data or publish the longest reports. The winners will be the organizations that can explicitly explain which sustainability factors are financially material to their specific business, how those factors affect their corporate strategy and capital allocation, and exactly how management is controlling those risks with investor-grade evidence.
For corporate leaders—whether CEOs, CFOs, or Chief Sustainability Officers—the strategic priorities are clear:
- Identify and Focus: Stop trying to report on everything. Identify the specific sustainability topics that are financially material to your unique business model and industry.
- Map Stakeholder Needs: Clearly map the distinct, overlapping data needs of your specific regulators, your unique investor base, and your most important commercial partners.
- Secure Your Value Chain: Treat your supply chain not just as a procurement logistics puzzle, but as a primary source of ESG risk. Because your investors are evaluating your Scope 3 footprint and supply chain resilience, you must proactively help your suppliers build their own data capacity.
- Connect to Financial Planning: Tear down the silos. Connect your ESG metrics directly to your core financial planning, capital expenditure models, and enterprise risk management frameworks. Sustainability data must live alongside financial data.
- Improve Data Infrastructure: Move away from manual spreadsheets. Invest in robust data infrastructure and internal controls to prepare for inevitable external assurance.
The winners in this new era will be the organizations that can explicitly explain which sustainability factors are financially material, how they affect corporate strategy, and how management is controlling those risks with investor-grade evidence. To get there, corporate leaders should ask themselves five critical questions:
- What specific sustainability topics are financially material to our unique business model and industry?
- Have we mapped the distinct, overlapping data needs of our regulators, investors, and key commercial partners?
- Are we treating our supply chain as a primary source of ESG risk and proactively helping our suppliers build their own data capacity?
- How can we connect our sustainability metrics directly to core financial planning, capital expenditure models, and enterprise risk frameworks?
- What investments in data infrastructure and internal controls are necessary to prepare for inevitable external assurance?
Companies must stop treating sustainability as an annual reporting exercise. The resilient corporate leaders of the future economy are those building the data infrastructure today to proactively deliver assured, dynamic insights. By doing so, they prove to the market not just that they are compliant, but that they have the exceptional management quality required for long-term value creation in a complex world.
About the author Charles Assaf
Charles Assaf is CEO and Co-Founder of Novisto, where he leads the company’s strategy, product vision and growth as it helps global enterprises manage sustainability data, streamline reporting and make more informed business decisions. With nearly two decades of experience founding and scaling enterprise software companies, Charles also advises emerging software startups and has served on the boards of several charitable organizations.
About Novisto
Novisto is the all-in-one enterprise system for sustainability performance management. Founded in 2019 and headquartered in Montreal, the company provides the digital infrastructure that large organizations need to manage sustainability data, disclosures, and performance with the same rigor as their financial data. Novisto helps sustainability leaders move beyond compliance and support long-term business resilience through reliable, actionable insights.
