Mounting ESG pressure demands a pragmatic approach
Today’s demanding stakeholders put high pressure on organisations to “get moving” on ESG reporting, often without knowing what that means or implies. Workiva is a platform solution which aims to simplify ESG reporting, auditing, and financial statements. We spoke to Philippe Moormann, Workiva’s ESG Regional Sales Director, about how companies can best tackle multiple ESG reporting challenges.
Do companies feel under pressure when it comes to ESG reporting?
“Absolutely: many organisations which Workiva speaks to are telling us that they are being told to act as quickly as possible. They feel under pressure to ‘Get ready’ and ‘start now’ because ‘it’s time to prepare’ for ESG reporting.”
How easy is that for them?
“Putting this advice into practice isn’t straightforward. Upcoming standards from the International Sustainability Standards Board and the ESRS (the European Sustainability Reporting Standards, which are being structured in line with the new CSRD regulation) are still being finalised. This puts many companies in the dark about how they should prepare.”
Why is there suddenly a move towards ESG reporting?
“As ESG mandates have slowly gained momentum, stakeholder expectations have also seen a sharp rise. Shareholders and regulators are demanding transparency and rigour, and assurances that they can trust the data and insights provided to them. These expectations aren’t being ‘rolled out’ gradually —they are already in full swing.”
That’s a good thing, right?
“Certainly. But however high stakeholder standards may be, it doesn’t resolve the underlying question: how can companies prepare and adapt to a Net Zero future and be prepared to report on something before they know what it is?”
So how can we navigate this unknown territory?
“It’s important to remember that new standards generally build upon requirements which already exist. ESG reporting is not a new concept, and while standards are becoming stricter, the underlying principles remain the same. For example, CSRD is not simply replacing the NFRD: it is building on the regulations that have been in place across the EU since 2018.”
But the world is bigger than the European Union…
“True, and organisations across the globe have been complying with local and ESG mandates for many years now. 89 countries around the world recently announced their support for TCFD recommendations and are likely to incorporate these existing guidelines into official legislation in some way. I am sure we will see the same acceptance for TNFD (Taskforce on Nature-related Financial Disclosures) evolve over time. Fundamentally, the purpose of what is being asked will not be changing: the bar is simply being raised in terms of quality, detail, and transparency.”
That’s the big picture, but how can a company set up the basics?
“Agility is key. As official reporting requirements are still in transition, it’s important to establish a solid underlying process that can pivot to accommodate any changes. That means not tying yourself to one single framework. It also means having access to verifiable data that you can easily apply to different reporting frameworks, rather than starting from the framework then working backwards. That’s a key to creating an agile environment. This flexibility can also be used to strengthen investor relations.”
“Begin by asking external and internal stakeholders which disclosures or frameworks they find important —whether it be SASB, GRI, CDP, or another one altogether—and find out what it is they like about that particular one. Understanding what their priorities are in this area while demonstrating agility will help you create a model tailored to your organisation’s needs, rather than restricting yourself from the start.”
What is the best way to prepare for the future of ESG reporting?
“Just as new standards are based on existing ones, the best way for you to prepare for the future of ESG reporting is to take stock of, then strengthen, what you already have in place. Looking at your process from start to finish, ask yourself, where is there room for improvement?”
What are some key checklist questions we might ask internally?
“Do you have access to all your important data? How is that data being gathered and verified? How are you collaborating on this within your organisation? Are you using consistent, widely recognised metrics? What are your biggest roadblocks to efficiency? How confident are you in the controls around your data collection and reporting process? Do you have a cross-functional team working on your ESG reporting?”
What is most important at this stage?
“Maintain an open, transparent dialogue with your internal and external stakeholders. Work together to identify what needs to change and then improving upon what you have is the key to being, and staying, prepared.”
But isn’t the ESG landscape changing constantly?
Certainly, and with the global socio-economic landscape evolving more rapidly than ever, risks and opportunities need to be constantly monitored. This also means ramping up materiality practices. Something that may have been immaterial to stakeholders six months ago could now be of the highest priority.
Shouldn’t we just wait, to see when the ESG waters calm down a bit?
“Indeed, you can decide to lead or be led. A lack of absolute certainty shouldn’t however get in the way of taking action. Have faith in the fact that the regulatory foundations are already in place, and work to strengthen your current process and strategy. Rather than waiting for new standards to be published, focus on what your stakeholders—from investors and the board of directors to creditors, customers, and employees—are demanding from you right now. Ultimately, what everyone is asking for is greater trust and transparency; two things we can all start working on today.”
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