Businesses prepare for new ESG standards

Senior finance professionals say their businesses are preparing for the Security and Exchange Commission’s expected

Senior finance professionals say their businesses are preparing for the Security and Exchange Commission’s expected new environmental, social and governance (ESG) reporting requirements, even if they’re unsure how to do so on a consistent and accurate basis, according to a new survey from Deloitte & Touche.

The survey, which polled 300 finance, accounting, sustainability and legal executives across multiple industries late last year, found that companies are anticipating an increased demand for ESG disclosures ahead of the SEC’s March 21 meeting. Finance professionals will look to focus their efforts on improving data quality, governance, and technology resources. However, the finance leaders polled said they are unsure how to do so in a consistent way.

“As companies rise to meet the moment, they will need the right mix of skilled professionals, streamlined processes, and dynamic technology to address stakeholder expectations for high-quality ESG disclosures that instill trust,” said Jon Raphael, national managing partner of transformation and assurance at Deloitte, in a statement.

Emissions rise from the American Electric Power Co. (AEP) coal-fired John E. Amos Power Plant in Winfield, West Virginia, U.S.

Luke Sharrett/Bloomberg

“With increasing calls for higher quality ESG disclosures, organizations need a robust, integrated strategy that weaves ESG into their DNA,” added Kristen Sullivan, a partner at Deloitte and U.S. sustainability and ESG services leader, and global audit & assurance climate services leader, in a statement. “Done right, the integrated approach can be a tool to promote resilience and adaptability — and drive greater overall value for the business.”

Notable highlights from the survey include:

  • More than half of senior executives polled (57%) said that data availability and data quality remain their greatest challenges concerning ESG data disclosure;
  • Only 21% of respondents said they currently have an ESG council or group to oversee ESG-related topics, but more than half (57%) said they are actively working to establish one;
  • 92% of respondents believe their organizations need to invest more in technology to handle proper ESG measurement, reporting and disclosures;
  • 58% of respondents said they are prepared to disclose Scope 1 GHG emissions, while 47% added they can disclose Scope 2 emissions, with just 31% reporting that they are prepared for Scope 3 emissions.

For the full survey results, head to Deloitte’s site here.

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