News analysis
Panic emerges over ESG reporting rules
Big firms worldwide are in a bit of panic as they scramble to prepare accurate climate data and report on their environmental, social and governance (ESG).
FT.com reported recently that companies are still far from ready for global climate data disclosure rules being developed by regulators.
In the US, the Securities and Exchange Commission is finalising a rule requiring audited emissions data to be included in company financial reports.
At the same time, European accounting standards setters are close to publishing new guidelines for climate reporting.
ESG reporting rules are coming
In the past, companies voluntarily reported environmental, social, and governance data.
Now that the laws are changing and companies will have to be transparent and honest about their ESG reporting, many big firms are bringing in the expertise of their finance departments to help with ESG reporting.
Big firms bring in the accountants to help with ESG reporting
The new laws on both sides of the Atlantic will mean that companies cannot afford to have ‘material misstatements’ in any of their reporting, be it financial or ESG reporting.
This new reality has left many firms trying to get to grips with ESG reporting. Many big firms, including Halliburton, the chemical group DuPont and Google’s parent company, Alphabet, among other blue chips, have brought certified public accountants to manage new ESG or sustainability controller roles.
Become qualified in ESG reporting
If you are an accountant or a professional interested in learning more about ESG reporting, the Corporate Governance Institute now has a bespoke certificate course in ESG reporting. Click here for course details.
Enrol in the certificate course: Best practice in ESG reporting.
Why is ESG reporting important? Ruth Odih explains why in the video below.
What is ESG reporting?
An ESG report provides information about an organisation’s environmental, social, and governance (ESG) impacts. The report is a communication tool to convince people and stakeholders that the company’s actions are sincere.
One of the challenges of ESG reporting is the level of comfort and knowledge your management and board may have with the metrics involved.
ESG reporting is important but doesn’t sync up easily with areas like traditional financial reporting. Without that familiarity, your organisation’s ability to build a competitive ESG advantage could be in jeopardy.
Ultimately, your company and its board needs to understand the implications and metrics of environmental footprints, greenhouse gas emissions, and water management. You may also need to delve into diversity, modern slavery, and wage equity.
Whatever ESG topics you’re involved with, you must be able to understand, collect data, control, and verify third-party practices to create an accurate report.