In a revealing study by KPMG US, a stark contrast emerges within the corporate world’s approach to ESG data management and reporting.
According to ESG Today, despite a widespread recognition of the importance of enhancing ESG capabilities, nearly half of the surveyed companies admit to still using spreadsheets as their primary tool for managing ESG data.
This insight comes from a survey involving 550 board members, executives, and managers across various sectors, predominantly from companies in North America and Europe with revenues exceeding $1bn.
As regulations tighten around sustainability disclosures, the urgency to upgrade ESG data handling is palpable among businesses. An overwhelming 90% of those surveyed indicated plans to ramp up their ESG investments in the coming three years, targeting areas such as dedicated ESG personnel (43%), specialized software (40%), and employee training (38%). However, the reliance on spreadsheets points to a significant gap between companies’ aspirations and their operational realities.
Despite the perceived advancement in sustainability reporting, with 83% of respondents believing they are ahead of their peers, the prevalent use of manual processes suggests a lack of preparedness. This disconnect underscores the need for more sophisticated data management systems, a sentiment echoed by 58% of respondents who plan to leverage artificial intelligence and machine learning for better data analysis and consolidation in the near future.
KPMG U.S. Climate Data & Technology Leader, Tegan Keele, highlighted the potential of AI and machine learning to enhance decision-making through deeper insights from diverse data sets. Yet, Keele also cautioned that technology alone cannot dictate a successful sustainability strategy; it requires a cohesive approach informed by organizational goals.
The survey also shed light on the broader implications of enhancing ESG capabilities, including better alignment with business objectives and increased responsibilities in non-ESG roles. Maura Hodge, KPMG U.S. ESG Audit Leader, stressed the importance of accurate sustainability reporting for regulatory compliance and long-term financial value.
Challenges such as insufficient resources and internal silos pose significant barriers to integrating sustainability strategies into business operations. However, with over three-quarters of companies anticipating organizational restructuring to better align with sustainability goals, the path forward involves a strategic investment in people and technology.
Rob Fisher, KPMG U.S. ESG Leader, encapsulated the sentiment by highlighting the necessity for organizations to transcend a compliance-first mentality. Viewing new reporting requirements as an opportunity to enhance their sustainability strategy can lead to a more cohesive and value-driven approach to business sustainability initiatives.
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