UK senior business leaders lack confidence in quality of ESG data, study finds
According to a study, almost three-quarters of UK-based senior decision-makers do not trust the data reported to their stakeholders on the progress of their company’s sustainability efforts.
In a global poll commissioned by software as a service (SaaS) Workiva, and with responses from 1,300 senior executives, nearly two-thirds (63%) of the 100 UK respondents said they felt their organizations were ill-prepared to meet their environmental, social and governance objectives (ESG).
According to respondents, the two biggest reporting challenges they face are finding ways to calculate greenhouse gas protocols when measuring scope 1, 2 and 3 emissions, and getting investor-grade carbon information.
At the same time, governments and regulators around the world are requiring companies to track and publish this data. However, according to Mandi McReynolds, head of global ESG at Workiva, this can be a difficult task.
“Stakeholders are asking for more detailed and uniform ESG-related data,” she said. “With the recent SFDR (Sustainable Finance Disclosure Regulation) in Europe, the ESG disclosure rule proposed by the SEC in the United States and the 27 core ESG indicators recommended by the Singapore Stock Exchange, the ESG reporting environment becomes more complex for organizations.
“In particular, we’re seeing companies struggling with how to accurately meet this required information around the ‘E’ in ESG to report GHG emissions with carbon level accounting data,” McReynolds said.
One of the reasons given by UK-based respondents for why it is difficult to track these measures is that they do not have the technological tools to record them correctly, with 51% of participants saying this.
Additionally, 19% of respondents said their organization has not deployed the right technology to properly manage ESG initiatives or effectively report their findings. This despite 78% of UK respondents acknowledging that technology is important for compiling and collaborating on ESG data, as well as validating its accuracy (74%) and mapping disclosures to regulations and framework standards (89%) .
“To navigate this era of change in ESG, companies need to be forward-looking and flexible in their planning,” said Julie Iskow, President and COO of Workiva. “Regulators, investors, customers and other stakeholders have identified what is essential today, but it is only part of what will be essential for reporting tomorrow.
“Technology, which enables seamless integration between teams on a centralized platform, will be key to streamlining the long-term reporting process and delivering transparent reports that can meet these ever-changing demands to further build trust. employees, investors and stakeholders at large.”
The senior leaders who participated in the survey are all individuals involved in their organization’s ESG reporting and strategic planning processes, and include those working in finance, HR, compliance and operations.
With this in mind, the research found that ESG reporting within organizations falls within the remit of a wide range of different people and functions, with UK respondents indicating that it 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 organizations had started formally tracking ESG-related data in the past two years, although 6% said they had yet to publish a report official on the progress of their ESG strategies.
The UK does better in this respect than some of its European counterparts, with around a fifth of respondents in Norway (21%), Sweden (20%) and France (17%) confirming that their organizations do not had not published an official report on their ESG progress either.