• by Ray Schultz , Columnist, August 25, 2023

Email teams could well be called on to explain their company’s environmental, social and governance policies (ESG). But their ability to do so will depend on the quality of their firm’s reporting, judging by the 2023 Global ESG Practitioner Survey, a global study from Workiva, conducted by Ascend2. 

Of the companies polled, 90% believe ESG will give their firm a competitive edge in the next two years. But they face a range of challenges: 

• Measuring qualitative initiatives (e.g., DE&I) — 40%
• Complying with ESG frameworks and standards — 39% 
• Compiling data from multiple sources — 39%
• Measuring specific issues (e.g. GHG emissions) — 38% 
• Validating data — 37% 
• Complying with regulation — 33%
• Communicating progress to stakeholders — 25%
• Not having the right technology in place — 19% 

But several departments may be involved in supporting ESG reporting:

• Executive leadership — 57% 
• Sustainability/ESG Operations — 46% 
• IT/Technology — 41%
• Corporate Communications/Corporate Affairs — 37% 
• Finance/Accounting —3 6%
• Operations — 32%
• Investor Relations — 23% 
• Legal — 20% 
• Marketing — 18% 
• Procurement — 16%
• Sales — 10% 

(Note the low representation of marketing: This suggests that the decisions are made at the top, and that the job of communicating them to the public falls further down the line). 

The way to unify these various stakeholders is to have a person to oversee ESG reporting and initiatives. Of the companies represented, 74% have such a person and 19% are planning to appoint one. 

In North America, 73% have someone in that role. But at 79%, European firms are more likely—perhaps because of the amount of regulation they face.  

But there is a disconnect—87% of executives say their organization has a person in that role, only 67% of managers agree, suggesting that operational changes made by business leaders are not being fully implemented.

And while 62% of executives believe their firm applies the same diligence to ESG reporting as it does to financial reporting, only 32% of managers agree.  

Similarly, executives feel that their top two concerns are complying with global standards and measuring qualitative initiatives (e.g., DE&I). But managers cite lack of technology and obtaining reasonable assurance.  

That aside, the respondents believe these opportunities will result from enhancing ESG disclosures: 

• Increased transparency — 71%
• Improved decision making form data — 48% 
• Increased brand awareness and/or reputation — 47% 
• Increased investor trust and confidence — 44% 
• Reduction of risk related to climate change — 41%
• Improved employee recruitment and/or retention —40% 
• Improved customer recruitment and/or retention — 39% 
• Improved relationship with suppliers — 35%
• Other — 22%

The companies polled expect to comply with these regulations and regulatory bodies:

• ASX Corporate Governance Council — 59%
• CSRD (Corporate Sustainability Reporting Directive) — 40% 
• SEC (U.S. Securities Exchange Commission)—38% 
• German Federal Financial Supervisory Authority (BaFin) — 32%
• UK Corporate Governance Code—28% 
• Office of the Superintendent of Financial Institutions (OSFI) — 25% 
• Hong Kong Monetary Authority (HKMA) — 21% 
• Japan Financial Services Agency (JFSA) — 14% 
• Other—7%

Better stay on it.

Ascend2 surveyed 926 environment, social, and governance practitioners in July 2023. The questionnaire was developed by Workiva and Ascend2 in consultation with Alex Edmans.