ESG is a topic that’s become embedded in corporate conversations. Boardrooms from Paris to Washington are deliberating how they can be more proactive on their environmental and societal impact, conscious they have a profound role to play in creating a more sustainable planet.
For senior executives, the debate has moved on from ‘if’ to ‘how’. We’ve finally reached a point in time where it’s widely acknowledged that ESG has moved from corporate social responsibility initiatives to the heart of company strategies and growth plans.
While it can be reassuring that many CEOs and their wider stakeholder groups are now on board with ESG, there is a common theme and concern across multiple industries. How does a business measure and demonstrate what it is doing to tackle such a wide variety of issues – from social inequality to the climate crisis? Political leaders are facing the same dilemma and they’re now finally edging towards regulation and enforcement.
The new reporting requirements are set to be rolled out over the coming months and years, with larger organisations expected to adhere first. What is clear is that senior executives should act now to help ensure they’re in a position to analyse and report the correct data in a timely fashion and be prepared to obtain assurance. And now the ISSB’s timelines are aligned with the EU, companies may choose to voluntarily adopt IFRS Sustainability Disclosure Standards regardless of local requirements.
For those reporting under multiple frameworks, such dual compliance would certainly make sense because the ISSB is setting the global baseline, ready for jurisdictions to layer on their local requirements.
The first steps should involve a pre-assessment, taking a high-level status quo overview of where the company reporting stands in relation to incoming requirements to help understand what the future reporting journey will look like. This should be followed by an impact and readiness assessment to gain a more detailed understanding – at a disclosure requirement level – of reporting performance. Finally, a full-fledged readiness project plan should be created exploring the company’s assessments and ambition level.
It should come as no surprise that political leaders and bodies are now acting to help ensure the business world sticks to its promises to play a leading role in driving a more sustainable planet. The world may be facing multiple challenges, including the conflict in Ukraine and a sluggish post-pandemic economic recovery, but ESG is expected to remain a key area of focus for decision makers and civic leaders. Now, more than ever, senior executives should take a proactive, strategic approach to help ensure their efforts are recognised.
A version of this article previously appeared in ESG Clarity.
© 2024 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.