What are the challenges Professionals face in ESG Reporting?

September 29, 2022
By CSE

In view of the accelerating changes in ESG, especially in the evolving landscape for standard-setting bodies and disclosure regulations, professionals struggle to keep pace and stay up to date.

 

challenges on esg integration

 

 

According to Bloomberg, in recent years ESG assets surpassed 35 $trillion up from $30.6 trillion in 2018. In 2025 they will most likely reach 50 trillion. It is obvious that these numbers imply an enormous number of investments in ESG. Although, how can we confirm this? Data collection, analysis, and control, as well as competing standards and frameworks, variate among companies. In fact, 85% of companies are using multiple ESG reporting frameworks. When corporate managers are allowed to disclose any corporate insights, they believe are critical and in a format of their choice, this can lead to an unreliable and inconsistent set of ESG data.

Moreover, the lax regulatory regime that can frame the ESG reporting is by itself a huge bias, that VPs, and ESG managers must face. Indeed, many ESG professionals have mentioned that they “face hard time hearing through all the noise and providing relevant, concise ESG metrics in telling their organization’s ESG story”.

 Furthermore, a lot of high executives have not yet incorporated ESG reporting in their annual reports, while others have just started to do so.  And while many companies made net zero commitments, they are now struggling to deliver on those. Why is that?

One of the main reasons is the fact that the more C-suites and senior executives try to operationalize sustainability, the more ill equipped their companies are for the task. According to the EU, the Corporate Sustainability Reporting Directive (CSRD), sets the standard by which nearly 50,000 European companies will have to report their climate and environmental impact. The directive was released in April 2021, and it will come into effect in 2023. The purpose of the CSRD, will be to provide clearer and more streamlined reporting standards.

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