Global Firms Struggle with ESG Complexity: Survey

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by KnowESG
KnowESG_Global Firms Struggle with ESG Complexity: Survey
Image courtesy of Workiva

Based on the 2023 Global ESG Practitioner Survey commissioned by Workiva Inc., 71% of surveyed ESG practitioners confirmed the involvement of three or more internal teams in ESG reporting within their respective organisations.

Moreover, 74% state that their companies have now designated at least one employee to oversee ESG reporting and initiatives, showing a 6% increase from the previous year.

Concurrently, an equal percentage anticipates that their organisations will need to adhere to two or more global regulations. These results collectively emphasise the growing significance of ESG in corporate reporting and underscore the intricate challenge of maintaining accurate and trustworthy data within ESG reports.

The 2023 Global ESG Practitioner Survey, which engaged over 900 professionals well-versed in ESG reporting within their organisations, was formulated in collaboration with Alex Edmans, Professor of Finance at London Business School. This iteration builds on the foundation of Workiva's 2022 Global ESG Practitioner Survey, which delved into the opportunities and obstacles presented by ESG reporting.

Alex Edmans remarked, "It's widely recognised that ESG is receiving amplified attention in boardrooms, and the escalating complexity of frameworks, standards, and regulations is introducing new complexities to ESG reporting. What stands out from the survey is the contrast between practitioners of all levels who acknowledge the value of ESG reporting and operational managers who indicate that their companies aren't treating ESG reporting with the same rigour as financial reporting."

Discrepancies Between Executives and Employees

The survey brings to light a divergence in perspectives across hierarchical tiers. While 62% of C-level executives strongly assert that their companies apply an equivalent level of diligence to ESG reporting as they do to financial reporting, this sentiment is shared by only 32% of managers and senior managers. Correspondingly, 87% of executives affirm that their organisations have appointed individuals to ESG-specific roles, in comparison to just 68% of managers who concur.

This incongruity suggests a notable disconnection between senior leadership and staff, potentially signifying inadequate readiness to conform to emerging regulations. These findings align with the outcomes of a previous survey conducted by Workiva and PwC.

ESG's Value Fueled by Reporting and Technology

Despite this disparity, ESG practitioners widely concur that ESG reporting holds inherent value. A resounding 90% of survey participants indicate that a robust ESG reporting programme will confer a competitive edge upon their organisations over the next two years.

Furthermore, the data suggests that companies with a lengthier history of ESG reporting are more likely to have reaped benefits from their ESG initiatives. Respondents from organisations engaged in ESG reporting for five years or more are likelier to attest that ESG efforts have yielded cost savings, enhanced brand visibility, and improved reputation compared to those reporting on ESG for two years or less.

In addition, there is an escalating belief among practitioners in the pivotal role of technology in ESG reporting. Nearly all survey respondents (95%) concur that adequate technology is indispensable for efficiently managing the ESG reporting process, marking a 19% rise from the prior year's survey. An even greater percentage (97%) agree that technology and data access will be pivotal in shaping decisions to advance ESG strategies.

Paul Volpe, Senior Vice President of Growth and Head of ESG Solutions at Workiva, comments, "The survey reaffirms what our customers express to us daily at Workiva. While investors and regulations remain paramount, practitioners recognise that ESG reporting extends beyond merely responding to external demands.

"When executed effectively, ESG reporting reveals opportunities and equips executives with a visionary perspective for the future, differentiating them from competitors in the eyes of customers, employees, and investors. However, the intricacies of ESG reporting are undeniable. Practitioners acknowledge that technology is the linchpin in this process, and it falls upon business leaders to empower their teams with the necessary tools to unlock ESG's value."

Workiva is poised to host a LinkedIn Live event featuring Alex Edmans, wherein key insights from the 2023 Global ESG Practitioner Survey will be explored on September 12. Interested parties can register at sm.workiva.com/linkedin-live.

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Source: Business Wire

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