Eye-opening new analysis from Accenture reveals how the pressing want for international reporting requirements on environmental, social and governance (ESG) efficiency that emerged at COP26 by the Worldwide Monetary Reporting Requirements Basis (IFRS) is ushering in a brand new period of measuring the efficiency of organizations and redefining what success means for firms. In line with the report, Measuring Sustainability. Creating Worth, whereas the CEO is on the helm of this seismic shift, CFOs and different senior leaders should additionally increase the bar on measuring and driving higher efficiency that delivers worth and influence for all stakeholders.
“Transparency builds belief—the inspiration of sturdy partnerships and a compelling purpose why folks be a part of an organization,” stated Julie Candy, chair and CEO of Accenture, in a information launch. “Utilizing the correct know-how and enterprise practices, there may be now a chance for organizations to assemble complete ESG knowledge that may assist rework how they do enterprise—constructing accountability throughout the group, reaching international sustainability objectives and in the end creating larger enterprise worth.”
The researchers analyzed responses from over 640 finance leaders in 12 industries and 6 nations to know how firms can higher measure, handle and report ESG efficiency to totally ship on their sustainability commitments. The report discovered that whereas the bulk (78 %) of finance leaders are searching for to know the monetary danger to their enterprise that sustainability represents, solely 47 % have outlined key metrics and knowledge sources for his or her ESG reporting.
In line with the report, companies that translate ESG metrics into key efficiency indicators (KPIs) to watch and advance their progress on concrete sustainability objectives usually tend to be rewarded by the market. Between 2013 and 2020, firms with constantly excessive ESG efficiency tended to attain 2.6x greater on complete return to shareholders (TRS) than medium ESG performers.
“The pressing name for a unified set of ESG requirements has lastly put sustainability on the precedence agenda in the best way companies report and disclose monetary knowledge, making COP26 doubtlessly the GAAP second for sustainability,” stated Peter Lacy, Accenture’s international Sustainability Companies lead and chief duty officer, within the launch. “This isn’t merely a name to enhance disclosure and reporting or tick packing containers, however reasonably a chance for top-to-bottom transformation that allows people in any respect ranges of the group to make higher choices utilizing new knowledge, balancing shareholder and stakeholder worth on sustainability and monetary efficiency.”
In line with the report, solely 26 % of firms have clear, dependable knowledge to measure and monitor their sustainability objectives. The analysis additionally discovered that 70 % of firms nonetheless use guide or semi-automated processes for his or her ESG reporting. Furthermore, with simply 31 % of firms claiming to have absolutely embedded ESG knowledge and measurement of their core operational and administration info programs, it’s clear that sustainability knowledge is just not but handled as important enterprise knowledge, regardless of the influence it could have on a corporation’s backside line.
A expertise hole can be hindering sustainability progress, with greater than half (54 %) of leaders citing insufficient expertise as a problem to measuring and reporting ESG efficiency, making the necessity for management from the highest much more vital.
“Digital and sustainability would be the two driving forces of competitiveness on this decade. Leaders should now rethink what efficiency means of their organizations and dedicate the identical assets and a focus to ESG that they do to monetary knowledge streams in the event that they need to unlock the total worth from and influence of sustainability,” stated Jason Dess, international lead, CFO & Enterprise Worth at Accenture, within the launch. “CFOs will play a central function—as they allocate capital and oversee efficiency—in monetary reporting and fascinating strategically with the capital markets. They’ve an actual alternative to shut the ESG knowledge hole by working with a wider set of ecosystem companions and throughout their firms to establish, extract, interpret and report all required knowledge.”
The Accenture report provides firms, and CFOs specifically, steering for the way to navigate ESG challenges and lead change by rearchitecting efficiency rooted in dependable knowledge that may be measured in an correct and clear approach. This consists of:
Inform and play a task in shaping the sustainability technique
To fulfill market calls for and make it possible for ESG reporting stays extra of a chance than a monetary danger, firms ought to publicly decide to establishing worth targets for his or her sustainability technique and ambition—in direction of, for instance, internet zero, circularity or supply of the UN Sustainable Improvement Objectives.
Give attention to measurement, accountability and efficient administration
Monetary leaders have to assess and form the “Sustainability DNA” of their organizations alongside CHROs and different expertise leads; rework the working mannequin by group design and the newest instruments and capabilities; and embed ESG objectives and accountability throughout the enterprise to drive basic shifts in direction of the creation of worth and influence for all stakeholders.
Search the correct knowledge to make higher choices at each stage, together with utilizing present and quickly rising know-how options
At present, monetary and ESG knowledge are usually not handled equally. Corporations want to acknowledge and enhance how sustainability knowledge is collected. This consists of defining a transparent plan to seize key knowledge; set up high quality and readiness programs for disclosure; design end-state ESG knowledge storage and reporting options; and establish key metrics for worth creation and inside efficiency.
Transcend reporting and disclosure to wholly rethink the definition of efficiency and success to stakeholders
Align on a powerful narrative that presents an efficient storyline for key metrics, then construct modular, built-in interactive parts—from voluntary reporting to compliance—that talk ends in a unified approach and make the most of advances in know-how and new methods of working to drive a brand new period of efficiency.
Obtain the total report right here.
Accenture commissioned McGuire Analysis Companies to conduct a survey of company finance leaders on how they method ESG measurement and reporting, and the challenges they face. We surveyed 640 finance leaders, starting from CFO to Director of Finance, in August and September 2021. We surveyed leaders at firms that reported greater than $1 billion in income, spanning 12 industries and with headquarters in six nations (China, France, Germany, Italy, the UK and the US). Accenture additionally convened and carried out an professional panel dialogue at COP26 with six company sustainability leaders in several industries at an occasion that happened in Glasgow, Scotland, on November 4, 2021.
