While a large majority (78%) of chief financial officers are facing pressure from stakeholders to take more action when it comes to sustainability, just 10% state that their companies are prepared for detailed reporting mandates in this area.
In addition, just 15% of CFOs say that they leverage ESG capabilities to fast-track their sustainability strategy and drive business value, a new study by Accenture has found.
The regulatory environment for ESG reporting is getting wider, and now includes the EU’s Corporate Sustainability Reporting Directive (CSRD), the US SEC’s Climate-Related Disclosures (CRDs), and standards from the International Sustainability Standards Board (ISSB).
As Accenture notes, compliance with these and other regulations places new demands on finance and sustainability teams but also offers opportunities.
Leveraging new technologies can help organisations gather better information, make smarter business decisions, and create value from sustainability efforts, it adds. Companies that integrate ESG reporting with technology can transition from mere compliance to achieving greater business value.
Nine key capabilities
Accenture’s research identifies nine capabilities essential to enable CFOs and their businesses to advance beyond compliance: data collection (automating ESG data collection); data quality (establishing frameworks for ensuring data quality); data availability and integration (providing access to ESG data across the organisation); transparency and integration of non-financial KPIs (linking non-financial metrics to financial reporting); analytical and forecasting technology (using AI for analysing and forecasting ESG data); leadership access (ensuring leaders have access to real-time ESG insight); ESG in business decisions (integrating ESG factors into business strategies); ESG skills in finance (enhancing ESG expertise within finance teams); and finance skills in sustainability (improving financial skills within sustainability teams).
As Accenture found, most companies have begun developing these capabilities, particularly in measurement.
Around 12% of firms fall into the category of ‘weak ESG measurement and management capabilities’, with partially automated data collection, manual quality controls, and limited data accessibility.
The majority (73%) fall under what could be considered moderate-level ESG measurement and management capabilities – they have better processes for data collection, robust quality controls, and wider data availability.
Finally, 15% have what could be considered strong ESG measurement and management capabilities – with comprehensive data collection and quality monitoring, predictive analytics, and strong collaboration between finance and sustainability teams.
Better decision-making
‘Companies that can transform ESG data into insights and embed them into business decisions are better able to identify sustainability-related opportunities, overcome barriers, and in the end, generate more value through better decision-making,’ Accenture said.
‘As our study findings show, CFOs who lead by example and approach this challenge by taking a strategic approach to building ESG measurement and management capabilities will likely create competitive advantage and accelerate their organisations sustainability strategy.’
