Deloitte’s survey of accounting, finance, legal, and sustainability executives for their views on a host of environmental, social and governance (ESG) has shown progress on disclosure and preparedness but found issues around reporting.
This latest research, titled the Sustainability action report: Survey findings on ESG disclosure and preparedness, shares executive insights about the increased preparations, challenges and planned investments being made to meet the growing expectation for high-quality sustainability reporting information.
It also revealed that sustainability and equity concerns continue to affect the financial landscape, and companies are moving from commitment to action in their sustainability reporting to address evolving stakeholder expectations.
Moving to action
Rather than reacting to disclosure requirements, companies are taking steps to accelerate their sustainability journeys by implementing changes to anticipate the strategic business benefits of integrating sustainability into business strategy.
95% of those surveyed are preparing for more disclosure requirements, including nearly 3 in 5 who are already making extensive preparations. 89% of executives have enhanced internal goal-setting and accountability mechanisms to promote readiness, and 81% report that new roles and responsibilities have already been created to prepare for additional disclosure requirements. Nearly 3 in 5 (57%) executives report having implemented an ESG working group tasked with driving attention to ESG, and another 42% are taking steps to do the same.
Sustainability planning and action
Beyond regulatory requirements, executives are now anticipating the business benefits to integrating sustainability into business strategy. More than one-half (52%) noted talent attraction and retention , increased efficiencies and ROI (52%), and building stronger stakeholder trust (51%) as potential business outcomes of enhanced sustainability reporting.
Companies also expressed willingness to invest in new technologies and tools to meet stakeholder expectations and future regulatory requirements. Virtually all executives (99%) are likely or very likely to invest in more technologies and tools over the next 12 months.
ESG reporting challenges
However, although companies are actively working to meet the demand for high-quality sustainability reporting and disclosure, challenges remain.
Companies had concerns about the accuracy of sustainability data. 35% of executives listed quality as the top data challenge, up from 25% in 2021. Another 25% cited access to data as the greatest challenge, a slight decrease from the 32% cited by a similar profile of respondents the previous year.
Many companies report being prepared to disclose Scope 1 GHG emissions (61%), and 76% of executives are ready to disclose Scope 2 GHG emissions, an increase from 47% in 2021. However, Scope 3 disclosure is still a work in progress, with only 37% of respondents currently prepared to disclose details. The vast majority (86%) reported challenges measuring Scope 3 GHG emissions.
In another recent survey Deloitte found current ESG metrics to be inconsistent, confusing, and at times misleading.
25 interviews with global leaders from the investment community, business world, academia, and non-profit sector. All agreed on the pressing need to close the gap between lofty climate pledges and quantifiable change.
The study went on to identify six conditions needed to catalyse the adoption of sustainability reporting and to create a broader operating environment conducive to widespread behaviour change.
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