One study shows that: On the one hand, sustainability is increasingly important in corporate reporting. On the other hand, ensuring accurate and reliable data in ESG reporting is a very complex requirement.
Increasingly complex ESG reporting frameworks, standards and regulations add to the complexity for companies. To conduct the study, Workiva and Ascend2 surveyed experts from around the world in leadership, finance and accounting, ESG operations, internal audit and risk management, and law about current challenges to ESG reporting.
Participants come from nine markets including the United States, Canada, the United Kingdom, Germany, France, the Netherlands, Australia, Japan and Singapore.
Significant ESG reporting effort
71% of respondents said that three or more internal teams within their companies contribute to ESG reporting. Additionally, 74% say that at least one employee at their company is charged with overseeing ESG reporting and initiatives, an increase of 6% compared to last year.
The same percentage expect their company to comply with two or more global regulations. In summary, these findings highlight the increasing importance of ESG criteria in corporate reporting and highlight the complexity of ensuring accurate and reliable data in ESG reporting.
How accurate is environmental, social and governance (ESG) reporting?
What is notable from the survey results is that perceptions of ESG reporting vary between different levels of management. While 62% of C-level executives strongly agree that their companies apply the same level of attention to ESG reporting as they do to financial reporting, only 32% of directors and senior executives share this view.
Likewise, 87% of executives say their company has hired someone for a specific ESG role, while only 68% of managers say the same.
This indicates a significant disconnect between management and employees and may mean that companies are not fully prepared to comply with the new regulations.
Environmental, social and governance (ESG) reporting is important
Despite this discrepancy, experts largely agree on the importance of ESG reporting. 90% of respondents said a strong ESG reporting initiative would give their companies a competitive advantage in the next two years.
The longer a company reports on ESG, the more likely this is to happen. Respondents from companies that have been reporting on ESG for five or more years are more likely to say that ESG has led to cost savings and improved brand awareness and/or reputation for their companies, compared to companies that have reported on ESG For two years or less -Report topics.
The importance of technology in environmental, social and governance reporting
There is a growing belief among professionals that technology is a key component of ESG reporting. 95 percent of survey respondents believe the right technology is critical to successfully managing the ESG reporting process, an increase of 19 percent compared to last year’s survey results. 97% believe access to technology and data will play an important role in the decision-making process to drive their ESG strategy.
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