Investing in new ESG functions and tools has been a trend for some time. Three out of four executives plan to obtain assurance over ESG disclosures in the next reporting cycle, indicating the importance of applying independence and objectivity to enhancing the reliability of this information. But now, rather than reacting to future disclosure requirements, companies are proactively implementing changes to accelerate readiness.
That’s one of the main findings of the latest Deloitte’s Sustainability Action Report. According to the data released, 81% of executives surveyed report that new roles and responsibilities have been created to prepare for disclosure requirements; 99% are somewhat likely or very likely to invest in more technology and tools to accommodate future requirements in the next 12 months.
It’s time to be proactive
Companies are internally shifting focus to prioritize ESG oversight, controls, and disclosure to prepare for increasing demand for high-quality sustainability disclosure. Nearly 3 in 5 (57%) survey respondents have implemented a cross-functional ESG working group tasked with driving strategic attention to ESG, and another 42% are in the process of establishing one. Further, the executives surveyed anticipate benefits of enhanced ESG disclosure, with more than half citing talent attraction and retention (52%), increased efficiencies and ROI (52%), and building stronger stakeholder trust (51%).
Data accuracy and availability: the main challenges
While companies are embracing the new reality of elevated disclosure requirements, 35% of executives surveyed cite “ensuring quality” as their greatest data challenge. Another 25% cite access to ESG data as the greatest challenge. Scope 3 GHG emissions disclosure seem to be the most challenging to address, with only about a third (37%) prepared to disclose details. The top challenges to Scope 3 GHG emissions details include lacking confidence in the quality of data from external vendors (51%) and a lack of data availability (41%), indicating a need for companies to further explore their approaches to data.
“While companies are setting ambitious climate and ESG goals, leaders remain cautious about their ability to deliver on rising disclosure requirements in a consistent, timely way. Companies are now working toward more reliable data, better technology, and additional resources to meet the growing need for high-quality ESG performance information. ESG assurance can be a critical tool in these preparations to help accelerate and enhance a company’s governance and reporting processes and controls.”, the authors conclude.