Can transparency save the world?

Directives such as the Corporate Sustainability Reporting Directive (CSRD) promote an approach that simultaneously combines transparency with accountability. The theory of change behind CSRD is that companies that disclose data on their social and environmental impacts will be more likely to take real steps towards sustainable development and ethical practices. A key element of this approach is the belief in metrics and KPIs (key performance indicators) – they are supposed to improve our understanding of reality, as well as shape the decisions made by boards and stakeholders, such as financiers and customers. The question is: is data disclosure alone enough to force the world to act?

Faith in KPIs

CSRD and other directives put emphasis on precise reporting – from greenhouse gas emissions, climate risk assessment to payment practices. KPIs are to become a compass that will show the way for companies and investors to follow. A comprehensive set of indicators measuring the impact on environmental, social and corporate governance (ESG) practices is seen as a tool for better risk management and building long-term company value.

But will the availability of these indicators really change the way we think about sustainability? The danger is that KPIs will simply become a reporting tool rather than a tool for driving real change. In a world where regulatory pressures are growing, some organisations may focus on just ticking off disclosure requirements, without taking real action to reduce their negative impact on the environment and society. Others will pursue actions that are irrelevant to the real impact of their business model and impacts across the company’s value chain. This can lead to a trap of disclosure without action, or actions with marginal impact.

Empty promises vs authenticity

In a world where we often encounter greenwashing, authenticity becomes a key differentiator. Some companies present their actions in an exaggerated way, touting minimal achievements as huge successes in the field of sustainable development. From this perspective, transparency can be both a threat and an opportunity.

On the one hand, companies can use reporting to create an idealised image that is unrelated to real actions. On the other hand, true transparency can be a powerful tool for holding companies accountable for their actions. Organisations that honestly and accurately disclose their progress, challenges, and failures stand out from the rest. Their actions become a model for others, and society, customers, and investors can draw conclusions based on reliable information.

The uncomfortable truth

The problem lies deeper, however. The transparency we are talking about requires full recognition of both successes and failures. Not all companies are ready for such disclosures. Transparency is not just about publishing data on financial results or CO₂ emissions. It is also about being open to showing where we make mistakes, where we can improve, and where our actions have not brought the intended results.

The uncomfortable truth is that many organisations are unable or unwilling to face their own shortcomings. For transparency to become a tool for real change, it must be combined with the courage to admit failures and draw conclusions from them. Companies that fail to do this risk losing trust – from both investors and customers.

Transparency as a force for change

Despite the above challenges, transparency can become a positive force that contributes to change. In a properly designed information disclosure system based on a reliably conducted double-materiality study, where data is verified, compared and publicly available, companies can be motivated to take real action. An organisational culture based on openness, honesty and ethics then begins to play a key role.

Transparency has a transformative power within the organisation. It introduces a sense of responsibility towards external stakeholders and also among employees, who become more aware of their actions and their consequences. This can strengthen an ethical organisational culture in which sustainable development is an integral part of the strategy, not just an addition to the report.

Ethical culture – the future of companies

The ethical culture we are talking about is not just a buzzword, but a key element in building sustainable companies of the future. Transparency, if authentic, becomes the foundation of this culture. Employees who see that a company operates ethically and in line with positive values are more likely to engage in sustainability initiatives. This also affects stakeholder relations – investors, customers and business partners have more trust in organisations that are honest and transparent in their actions.

However, for an ethical culture to truly function effectively, it requires systematic action. Transparency is a tool that can support this process, but only if it is treated as a means to an end, not an end in itself.

Transparency alone won’t save the world, but it can be a catalyst for change. Companies that make the effort to honestly report on their activities are building the foundation for a more sustainable future. But authenticity is key – it is what separates organisations that truly strive for change from those that just pretend to do so. As regulatory pressures and societal expectations grow, transparency is becoming not only a legal requirement, but also a moral one.