As the risks and opportunities associated with ESG come into sharper focus, it’s becoming a business imperative for companies to develop a strategy for ESG reporting — and that they verify the data. Increased scrutiny from investors, new regulatory requirements and shifting consumer expectations mean companies face new pressures to measure, disclose and make progress on ESG initiatives.
Stakeholders across the business spectrum see ESG as a window into a company’s future. ESG reporting and metrics are also an important indicator of a company’s overall health, and how and what you report can lay the foundation for a compelling story about the impact your company is making on the world.
Global regulations are evolving quickly. While some of the new or proposed rules and regulations have a singular focus on climate change issues, others address sustainability more broadly.
The Securities and Exchange Commission (SEC): The US agency is set to finalize new rules for climate disclosures that, as proposed, focus on the oversight of climate-related risks, the financial impacts of severe weather events and greenhouse gas emissions.
The European Financial Reporting Advisory Group (EFRAG): Its member organizations developed new, expansive ESG reporting requirements under the Corporate Sustainability Reporting Directive (CSRD). These will impact EU-listed companies as well as non-EU-listed companies with large subsidiaries in the region.
The Financial Conduct Authority (FCA): The UK financial markets regulator, requires UK-listed companies to disclose whether their climate-related disclosures are aligned with the Task Force on Climate-Related Financial Disclosures (TCFD) framework, or explain why not.
The International Sustainability Standards Board (ISSB): The board has developed two sustainability standards expected to be finalized later this year. One focuses specifically on climate-related issues while the second covers general sustainability-related disclosures. Additional standards are expected.
Many of the new global regulatory sustainability standards would require independent assurance of ESG data, such as Scope 1 and Scope 2 greenhouse gas emissions, as a way to bolster confidence in the accuracy of this information in the marketplace.
Companies should have a strategy for validating ESG data and should develop processes and controls that support that data from the sources (internal and external) to reporting. Within its processes, companies should have controls around data collection, calculation and reporting that establish a consistent methodology for collecting timely and accurate information across the value chain.
Working with an independent auditor to validate ESG data can lend credibility to your organization and build trust among key stakeholders at a time when investors are using this information in their decision-making process and there is some skepticism about the robustness and accuracy of these disclosures.
Compelling ESG reporting requires collaboration and insight from across the organization to work toward common goals as a team.
Why work with PwC to help you take the next step forward? Because wherever you are on your journey, we’re ready to meet you there. We bring purpose, vision and practicality to your unique set of challenges — and we understand where you’re coming from. We’ve been on our own ESG journey, and we’re ready to share our insights and successes to help you.
PwC has made a worldwide, science-based commitment to achieve net zero greenhouse gas (GHG) emissions by 2030.
At PwC, we're doing our best to stand for inclusion and opportunities for all.