With the new regulatory requirements, not only disclosure itself becomes mandatory, but also independent verification of Environmental, Social, Corporate Governance (ESG) information. However, the KPMG report shows that only 25% of the surveyed companies are ready for this.
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The recent regulatory changes aim to strengthen the transparency of ESG-related activities of organizations and increase trust in the sustainable development information they publish. Particularly important is the requirement for attestation by an independent auditor of reports containing non-financial information. This obligation arises from the CSRD directive (Corporate Sustainability Reporting Directive) introduced by the European Union and the related ESRS standards (European Sustainability Reporting Standards).
– With the regulations coming into effect, the rules and market requirements are changing. Undoubtedly, the new regulations are a driving factor in increasing transparency even more than before. Non-financial reporting will begin to be controlled at a level comparable to financial information. This will minimize the risk of green washing and positively affect the trust that investors and stakeholders place in companies – says Iwona Galbierz-Sztrauch, partner, leader of advisory services for the financial sector, ESG leader at KPMG in Poland.
However, a new KPMG study conducted among 750 companies worldwide shows that as many as 75% of the companies surveyed are not ready for the upcoming requirements for independent audits of non-financial ESG information. Only one in four surveyed organizations has the resources and skills to properly prepare non-financial information subject to external attestation.
Meanwhile, 78% of listed organizations are currently or will soon be subject to the obligation to publish non-financial ESG data attested by an independent auditor. So far, however, only 30% of the companies surveyed have used such attestation of information.
– Companies whose strategy is built around the aspect of sustainable development perceive the new rules more as an opportunity than another regulatory requirement – says Justyna Wysocka-Golec, Partner Associate, ESG team leader, Climate & Nature in the consulting department at KPMG in Poland.
– Highly transparent organizations become more credible. It positively affects reputation, and in the long term – also stakeholder loyalty. Ensuring high-quality ESG indicator data is associated by respondents not only with improving their reputation, but also with expanding their customer base, increasing market share, improving profitability levels and company innovation. For CEOs, it is crucial to understand that investment decisions in the ESG area must be based on reliable, detailed, high-quality data – she adds.
The KPMG study also indicates that a board engaged in ESG issues, regular training, and the implementation of data collection control mechanisms directly translate into a high level of readiness of companies to prepare non-financial information.
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