Is there a lack of confidence around ESG reporting?


Deloitte has found less than half of professionals are confident in the ability of their firms’ financial reporting teams to gather ESG metrics for regulatory compliance purposes.  

Only 16.4% of professionals reported that their organisation had an ESG controller, however, professionals from organisations that have an ESG controller report confidence in their financial reporting in this area that is 30 points higher than the confidence levels of those without – 75.5% to 45.3%.

At the time of the poll, 41.6% of respondents said that their organisations have no plans to hire dedicated controllership staff, while 7.2% plan to hire an ESG controller in the year ahead. 

More than half of respondents – 53.4 – say their finance functions have some level of influence on organizational ESG matters, ranging from attending board meetings to producing environmental, social and governance management reports to offering occasional opinions on the topic.

Those professionals with finance teams able to influence such matters boast confidence levels more than double at 60.7% those who say their finance team has no organizational influence at 27.2%.

Meanwhile, data collection to support such efforts was found to be the biggest challenge as reported by over a quarter of respondents. Professionals from organizations with a controller are more likely to report data collection as their organization’s top challenge at 39.6%.

Dina Trainor – a risk and financial advisory managing director at Deloitte – said, “It’s concerning to see so few respondents reporting confidence in their ESG reporting as we await new U.S. regulatory guidance on climate disclosure reporting requirements.

“Now is the time to take a close look at your organization’s current ESG reporting capabilities and protocols and undertake improvements if needed. The good news is that there are clear actions organizations can pursue that have a strong correlation to building trust in ESG reporting.

“It’s important that finance teams have a seat at the table when it comes to ESG, as financial reporting and analysis, as well as the data that contribute to them are often set by the tone at the top. Finance is not teaming effectively with those who are leading ESG for their organizations — and vice versa — reporting accuracy and efficacy could be at risk.”

Deloitte’s Matt Hurley added, “Naming a leader, such as an ESG controller, to spearhead ESG finance and accounting efforts is one of several ways to raise confidence and trust levels in related reporting, no matter organizational scale.

“Organisations of any size, geographic footprint and complexity can take advantage of such roles — whether temporary or more permanent — to establish, hone and maintain ESG reporting programs. Ensuring finance or accounting leaders are involved in ESG matters is similarly important.”

“The basics of ESG reporting are universally challenging. Surprisingly, those that have ESG controllers in place report data collection challenges at a higher rate, possibly because that individual is more in tune with the unique challenges that ESG data aggregation and controls can pose. It’s important that organizations focus on building the foundation — including sourcing, cleaning, and assuring data — to support successful, confident reporting on the back end.”

Earlier this year, a survey by Advanced found that only 36% of UK senior decision markets list ESG as a business priority this year.

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