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Nearly three-quarters of UK-based senior decision-makers do not have confidence in the data being reported to their stakeholders about how their company’s sustainability efforts are progressing, research has shown.
In a global poll, commissioned by software-as-a-service (SaaS) company Workiva, and featuring responses from 1,300 senior leaders, nearly two-thirds (63%) of the 100 UK participants said they feel their organisations are ill-prepared to meet their environmental, social and governance (ESG) goals.
According to respondents, the two biggest reporting challenges they face are finding ways to calculate greenhouse gas protocols when measuring scope one, two and three emissions, and achieving investor-grade carbon disclosures.
At the same time, governments and regulators around the world are demanding that enterprises track and publicly report such data. However, according Mandi McReynolds, head of global ESG at Workiva, this can be a difficult task.
“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 reasons the UK-based respondents gave for finding it difficult to track these metrics is that they lack the necessary technology tools needed to record it correctly, with 51% of participants stating this.
Furthermore, 19% of respondents said their organisation has not deployed the right technology to manage ESG initiatives properly nor report their findings effectively. This is despite 78% of UK respondents acknowledging that technology was important for compiling and collaborating on ESG data, as well as validating it for accuracy (74%) and mapping disclosures to regulations and framework standards (89%).
“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.”
The senior leaders who participated in the poll are all individuals who are involved in their organisations’ ESG reporting and strategy planning processes, and include those working in finance, HR, compliance and operations-related roles.
In line with this, the research revealed that ESG reporting within organisations falls under the remit of a wide range of different people and job functions, with the UK respondents indicating that this is the responsibility of either the finance department (37%), facilities (35%), human resources (28%) or a dedicated ESG team (32%).
Among the UK cohort of respondents, 63% said their organisations began formally tracking ESG-related data in the past two years, although 6% said they are yet to release a formal report about how their ESG strategies were progressing.
The UK is doing better, in that regard, than some of its European counterparts, with around a fifth of respondents in Norway (21%), Sweden (20%) and France (17%) confirming their organisations had not published a formal report about their ESG progress either.