In a rapidly evolving business landscape where environmental, social, and governance (ESG) considerations are increasingly crucial, Deloitte’s recent “2024 Sustainability Action Report” reveals a significant shift in corporate priorities.
The survey indicates that 74% of public companies plan to invest in sustainability reporting technology and tools over the next year. This investment aims to enhance their ESG (Environmental, Social, and Governance) disclosure capabilities and align with heightened reporting requirements.
This shift in focus follows the introduction of several new regulatory mandates and standards, including the EU’s Corporate Sustainability Reporting Directive (CSRD), the International Financial Reporting Standards’ (IFRS) International Sustainability Standards Board (ISSB) standards, California’s new climate reporting laws, and the U.S. Securities and Exchange Commission’s (SEC) climate disclosure rule.
The survey collected insights from over 300 executives, including senior finance, accounting, sustainability, and legal professionals at publicly owned companies with revenues of at least $500 million. These executives represent various sectors, such as consumer products, financial services, life sciences and health care, oil and gas, and technology, media, and telecommunications.
The report highlights key actions companies are taking to address increasing ESG reporting requirements, with a focus on investing in technology and staffing. According to the survey, 74% of respondents expect their companies to invest in new technology or tools to improve the quality and timeliness of their disclosures.
Almost all respondents, 99%, have either already upgraded or plan to upgrade their internal processes to better meet future disclosure demands. Additionally, over 75% of respondents have established new roles and responsibilities to handle the growing ESG regulatory requirements.
A notable finding is the increasing executive responsibility for overseeing sustainability reporting, particularly the rise of the Chief Sustainability Officer (CSO). The report shows that 55% of respondents now indicate that the CSO manages ESG disclosures, up from 42% in 2022. Furthermore, 42% report that the executive leadership team is involved in ESG management, an increase from 31%, and 41% mention the general counsel, up from 26%.
“The creation of dedicated ESG teams, the rise in specialized roles, and investments in sustainability reporting all signify a strategic shift toward embedding sustainability into core operations. While challenges remain, the commitment to sustainability is becoming more evident as companies unlock the potential of ESG insights,” said Kristen Sullivan, Audit & Assurance Partner, Sustainability and ESG Services at Deloitte & Touche LLP.
A key development highlighted by the survey is the creation of cross-functional ESG teams within many companies. According to the survey, 52% of respondents already have these teams in place, while nearly all of the remaining respondents, 46%, are in the process of forming or planning to create such teams. Of the companies that have established these teams, 98% report that they meet at least quarterly, and 43% meet at least monthly.
Despite these efforts, data quality continues to be the primary challenge in ESG reporting. Deloitte acknowledges the necessity for ongoing improvements in its sustainability practices and has pinpointed several areas requiring further advancement. These include refining data collection and reporting systems, boosting stakeholder engagement, and navigating the shifting regulatory environment.
Do you have any story or press releases you want to share? Send tips to editor@envestreetfinancial.com
Follow us on Twitter, Facebook, or LinkedIn to ensure you don’t miss out on any