Research Says, Leading Business Leaders in the UK Lack Faith in Reliability of ESG Data

Published on: 23 June 2022
by KnowESG
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According to a global survey of top business leaders, the UK is performing better than other nations in terms of how its organisations report ESG data, but there is still space for improvement.

According to research, nearly 75% of senior decision-makers in the UK lack confidence in the information provided to their stakeholders regarding the status of their company's sustainability initiatives.

Almost two-thirds (63%) of the 100 UK participants in a global survey conducted by software-as-a-service (SaaS) business Workiva and including responses from 1,300 senior leaders indicated they felt their organisations were unprepared to accomplish their environmental, social, and governance (ESG) goals.

Finding methods to compute greenhouse gas procedures when measuring scope one, two, and three emissions, and reaching investor-grade carbon disclosures, according to respondents, are the two main reporting issues they encounter.

Governments and authorities from all around the world are requiring businesses to track and publicly report such data. However, this can be a challenging task, according to Mandi McReynolds, head of global ESG at Workiva.

“Stakeholders are calling for more detailed and uniform data related to ESG,” she said. “With the recent Sustainable Finance Disclosure Regulation (SFDR) 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.

“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,” said McReynolds.

One of the explanations given by respondents from the UK for why they find it challenging to measure these indicators is that they lack the technological resources required to do so.

Additionally, 19% of respondents claimed that their organisation had not implemented the required technologies to handle ESG activities adequately or successfully report their findings. Despite this, 78 per cent of respondents from the UK stated that technology was crucial for gathering and working on ESG data, and for verifying its accuracy (74 per cent) and matching disclosures to framework standards and rules (89 per cent).

“To navigate this era of change in ESG, businesses must be forward-looking and flexible in their planning,” said Julie Iskow, president and chief operating officer at Workiva. “Regulators, investors, customers and other stakeholders have identified what’s essential now, but this is only part of what will be essential for tomorrow’s reporting.

“Technology, which enables seamless integration between teams in one centralised platform, will be key to streamlining the reporting process long-term and delivering transparent reports that can meet these evolving demands to further boost employee, investor and wider stakeholder trust.”

Senior leaders who took part in the survey included those with responsibilities for finance, human resources, compliance, and operations, as well as those who participate in their organisations' ESG reporting and strategy planning processes.

According to the research, ESG reporting within organisations is the responsibility of a diverse range of individuals and job functions. UK respondents indicated that this is either the responsibility of the finance department (37%) or a dedicated ESG team (28%), facilities (35%), human resources (28%) or all of these departments or teams (32 per cent).

Among the UK respondents, 63% stated that their companies had started actively recording ESG-related data in the last two years, albeit 63% added that they had not yet published a formal report on the state of their ESG initiatives.

In that sense, the UK is performing better than some of its European competitors. For example, approximately a fifth of respondents in Norway (21%) and Sweden (20%), as well as France (17%), confirmed that their organisations had not released a formal report regarding their ESG progress.

Source: Computer Weekly.com

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