Canadian ESG reporting is falling short, leaving organizations at risk of missing opportunities for increased long-term value creation and goodwill for their brand.
TORONTO, January 27, 2022 — PwC Canada unveiled its inaugural Canadian ESG reporting insights study, analyzing the current and trending challenges Canadian organizations face with their ESG reporting practices. This comprehensive analysis explores ESG reporting maturity across 150 of Canada’s top organizations. Relying exclusively on publicly available information, PwC assessed elements such as strategy, materiality, metrics, assurance and other key components of ESG reporting. The data collected will help companies improve where they fall short, and strategize to successfully include ESG, considering the growing significance it holds with investors and stakeholders.
In a PwC Global ESG Investor Survey, nearly 80% of respondents said ESG was an important factor when making investment decisions. Employees, lenders, customers, regulators and other stakeholders are also using ESG information to inform their decisions. And yet, more than half (59%) of the organizations reviewed are not including sustainability-related information in their annual report beyond a dedicated corporate social responsibility section.
Leaders of Canadian organizations need to understand that transparency and accountability are critical for stakeholders in today's evolved business environment,” said Sarah Marsh, Partner and National ESG Report and Assurance Leader, PwC Canada. “Organizations must address the true value of ESG as soon as possible. As stakeholders look for leadership on climate change, social justice and other pressing challenges, Canadian companies that demonstrate how they’re creating value for everyone will gain an edge on several fronts.”
Momentum is building in the wake of COP26 and the growing recognition that climate change affects virtually every business, government organization and investors in Canada. But current reporting is falling short of stakeholders’ expectations. More than one-third (35%) of companies have a formal net-zero commitment, but just 17% of them have committed to reaching net zero by a specific date.
PwC’s analysis revealed that stakeholders are increasingly looking for companies to disclose long-term inclusion and diversity strategies, targets and report progress against their targets. However only half (51%) of the top companies provide short-, medium- and/or long-term timelines for their ESG targets.
Of the top 150 Canadian organizations reviewed, about half are disclosing their policies around cultural diversity. 68% disclose a gender diversity policy that’s set and reported against measurable targets.
“Individuals and organizations are dealing with a growing trust deficit, due to fundamental economic, environmental and societal changes in the world,” said Mike Harris, Partner and ESG Practice and Net Zero Leader, PwC Canada. “Organizations that take a more holistic view of incorporating ESG in their business strategies will be able to build brand value and long-term trust, as they look to deliver sustained outcomes.”
Although in Canada, ESG disclosures are currently voluntary, there are already signs and trends indicating changes on the horizon, like the Canadian Securities Administrators’ proposed climate-related disclosure requirements. There are several foundational steps that organizations can take to prepare themselves to meet future regulatory requirements as well as create value through their sustainability reporting.
In an era evolving faster than ever before, organizations preparing to meet future requirements of ESG reporting can begin with developing a roadmap that will drive how they will reach their targets. To have confidence in your ESG reporting, stakeholders need to see the full story. All organizations will benefit from strong execution in their reporting and access to the right data through appropriate tools and technology.
Canadian business leaders must ask themselves if their organization is prepared to grow into a more sustainable, transparent and innovative business with a strong brand value.
To learn more about the 2022 ESG Reporting Insights study click here. Earlier this year, PwC Canada launched its Trust Roadmap, which includes ESG reporting as a part of the firm’s holistic approach to address the growing trust deficit.
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