Regulatory deadlines loom and only 25% of companies feel ready to have ESG data independently assured: 乐鱼（Leyu）体育官网 research

乐鱼（Leyu）体育官网 research finds only 25% of companies feel they have the ESG policies, skills, and systems in place to be ready for independent ESG data assurance.
Over half of those that feel least ready for ESG assurance say it is challenging to balance ESG assurance goals with the profit expectations of shareholders.
Those most ready for ESG assurance tend to have boards more engaged on ESG issues, conduct regular ESG training and have controls in place for ESG data.
Many see benefits from ESG assurance beyond compliance; about half surveyed say it can lead to greater market share, spur innovation, strengthen reputation and reduce costs.

New York, 26 September 2023 鈥� 乐鱼（Leyu）体育官网鈥檚 recent report, Road to Readiness: 乐鱼（Leyu）体育官网 ESG Assurance Maturity Index 2023听reveals that as many as 75 percent of companies globally feel they have a long way to go to be ready to have their ESG data assured and meet new regulatory requirements. In a matter of months, the first tranche of mandatory regional and international sustainability reporting standards will come into force.

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Being ESG assurance ready means identifying the relevant regulatory framework and having the right metrics with robust systems, processes, controls and governance for collecting and managing the data. Putting those preconditions in place now, in advance of the 2024 reporting cycle, will give companies an advantage not only when it comes to meeting new requirements but capturing the benefits of ESG assurance as well.

Larry Bradley

Global Head of Audit, 乐鱼（Leyu）体育官网

The index captures the views of senior executives and board members at 750 companies across industries, global regions and revenue sizes, measuring the progress companies have made in key areas to gauge their relative maturity for being 鈥楨SG assurance ready鈥�. Respondents were ranked as either leaders (top 25%), advancers (next 50%), or beginners (bottom 25%) based on their maturity.

Key findings include:

Larger companies (US$10B+) tend to be more ESG assurance ready, with an average score of 56.3 (on a 0-100 scale), compared to companies US$5-10B (45.3 average score) and under US$5B (41.7).
Geographically, the ESG assurance readiness of companies is relatively close between the highest-ranking countries 鈥� France (50.4), Japan (50.0) and the US (49.4) and the lowest-ranking 鈥� Brazil (43.1) and China (43.0).
Leaders ranked more than three times higher than other respondents (50% to 14%) for having processes and controls documented, in place and tested for environmental data, with similar leadership for governance data (52% to 19%) and social data (45% to 16%).
87% of Leaders are integrating their ESG data systems with financial reporting systems to gain the benefit of consistent financial controls over non-financial data, compared with only 35% of others.

From the survey just 52% of respondents are obtaining some level of external assurance over their current ESG disclosures. Of those just a fraction are obtaining reasonable assurance (14%) or limited assurance (16%) over all of their ESG disclosures that will be required under incoming regulations, signaling that there is still more progress to be made on their ESG assurance maturity journey.

While most companies have been doing some voluntary reporting on sustainability issues, they typically didn鈥檛 subject that reporting to the same rigor, controls and oversight that will be needed to meet the new regulatory requirements to be assured. Now there will be regulatory and assurance requirements to report accurate information, which raises the bar on controls and processes as well as qualitative statements that will need to be made around the data.

Mike Shannon

Global Head of ESG Assurance, 乐鱼（Leyu）体育官网

The report identifies five critical steps that leading companies are doing to become ESG assurance ready:

Determining applicable ESG reporting standards
Building robust ESG governance and developing the right skills
Identifying the applicable ESG disclosures and necessary data requirements
Digitizing ESG data processes and ensuring high quality data
Working with the value chain to collect ESG information

Robust governance sets the foundation for becoming ESG assurance ready. For Leaders, not only is ESG a CEO priority and on the board鈥檚 agenda, more than half (53%) say their board is knowledgeable about their company鈥檚 ESG assurance issues, compared to just 28% of less ESG-mature respondents. It is also notable that at firms that are less ready for ESG assurance, 58% of CEOs and board members say it is challenging to balance ESG assurance goals with the profit expectations of shareholders. Yet about half of all respondents (54%), and CEOs and board members notably (47%), say that ESG assurance has the potential to increase market share, as the company鈥檚 values become more aligned with like-minded customers and investors.

For media queries, please contact:

Brian O鈥橬eill - Senior Manager, External Communications, 乐鱼（Leyu）体育官网 International
E: brian.oneill@kpmg.co.uk
T: +44 (0)7823 668 689

About 乐鱼（Leyu）体育官网鈥檚 ESG Assurance Maturity Index

乐鱼（Leyu）体育官网 surveyed senior executives and board members with ESG knowledge at 750 companies across industries, global regions and revenue sizes. The Index examines the progress companies have made in key areas to gauge the relative maturity of assurance readiness measured on an index of 0-100. Based on their rankings, companies are classified as 鈥淟eaders鈥� (the top 25^th percentile), 鈥淎dvancers鈥� (the next 50^th percentile) and 鈥淏eginners鈥� (the bottom 25^th percentile). The five areas or 鈥榩illars鈥� designed to help companies measure progress include: (1) governance, (2) skills, (3) data management, (4) digital technology, and (5) supply chain.

Research was conducted between April 鈥� June 2023.

About 乐鱼（Leyu）体育官网 International

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