With pressure mounting to meet tough ESG criteria and to avoid “greenwashing,” a global survey of ESG practitioners details top reporting challenges and opportunities.
A new survey by Workiva – a cloud-based platform designed for transparent, simplified reporting – reveals that 63 per cent of senior decision-makers in the UK feel that their organisation is underprepared to meet their environmental, social, and governance goals and regulatory reporting mandates.
Furthermore, 73 per cent of them don’t have confidence in the data currently being reported to stakeholders, even though many firms have appointed an ESG-specific role to oversee reporting, the report shows. Seventy-two per cent of UK respondents nevertheless recognise its value to stakeholders and investors.
The survey examined 1,300 organisations’ current processes, collaboration and confidence in their ESG reporting. Respondents involved in their company’s ESG reporting and strategy – working in finance, ESG, sustainability, HR, compliance, operations, and legislative affairs – were polled.
Although progress is needed across all facets of ESG, the research shows that tackling the ‘E’ is a major focus for companies. UK respondents predicted that over the next 12 to 18 months, 43 per cent of their organisation’s internal ESG budget would be devoted to environmental factors, 29 per cent to social and 28 per cent to areas of governance. The increased proportion of budget set aside to focus on environmental factors reflects respondents’ concerns about the reporting challenges they face.
“Stakeholders are calling for more detailed and uniform data related to ESG,” Mandi McReynolds, head of global ESG at Workiva, said. “With the recent Sustainable Finance Disclosure Regulation directive in Europe, the ESG disclosure rule proposed by the SEC in the US, and the Singapore Exchange’s recommended 27 core ESG metrics, the ESG reporting environment is becoming more complex for organisations,” she added. “In particular, we are seeing companies grapple with how to accurately meet these required disclosures around the ‘E’ in ESG to report GHG emissions with carbon level accounting data,” she stressed.
Three out of four UK respondents also noted that technology was important for compiling and collaborating on ESG data, and half of them do not feel that departments within their organisation have the tools necessary to provide data for ESG reporting. In fact, one in five reported that their organisation does not employ technology suitable for managing the ESG reporting process and programme initiatives, the survey reveals.
The research also shows that UK companies are seeing business value in their current ESG reporting. “While challenges around communicating ESG corporate value to stakeholders still exist, the findings show clear positive outcomes for businesses who prioritise ESG reporting,” Julie Iskow, president and COO at Workiva, stressed.