PORTLAND, Ore., November 16, 2021 – NAVEX Global® today shared key findings from a OnePoll survey of corporate compliance managers and executives across the U.S., U.K., France and Germany. The vast majority (89%) of respondents include ESG reporting as part of their organization’s compliance program, illustrating a swift convergence of ESG and compliance functions within organizations today. Yet, survey respondents also indicated that measurement frameworks and responsibility for ESG reporting remain diverse and inconsistent.
Additional findings include:
- Of the 11% of respondents who said ESG reporting is not currently part of their compliance program, 71% strongly agree or somewhat agree that it should be included.
- Responsibility for ESG reporting remains varied, reflecting the impact of ESG across the business. Accountability for ESG reporting is currently held with compliance (43%), finance (21%), multiple departments (15%), a dedicated ESG department (9%) and legal (7%). This closely reflects where most respondents believe ESG reporting accountability should lie with 42% favoring the compliance department, followed by finance (21%).
- Organizational ESG reporting concentrates on environmental factors, demonstrating the need for growth in ESG’s social and governance aspects. For example, respondents said their top-reported measures include energy management (47%); data security (39%); greenhouse gas emissions (39%); air quality (38%); waste and hazardous materials management (35%) and water and wastewater management (35%) while the least-reported measures include access and affordability (16%); competitive behavior (15%); selling practices and product labeling (14%) and systemic risk management (12%).
“We’ve long signaled the need for ESG and compliance to be managed together and holistically. Amid increased focus on ESG factors from stakeholders of all kinds, it is clear that convergence is happening,” said Karen Alonardo, Vice President of ESG Solutions, NAVEX Global. “As new governing bodies are formed to develop global standards, we anticipate more formal guidance on how ESG risks are measured. Now is the time for compliance professionals to get their arms around ESG and be ready to monitor, measure and report this data just as they do today for established compliance measures.”
Recognizing the industry’s need for standardized ESG reporting, the International Financial Reporting Standards (IFRS) Foundation recently announced a new International Sustainability Standards Board (ISSB) that will develop a comprehensive global baseline of high-quality sustainability standards to meet investors’ information needs.
The new ISSB may resolve the confusion of a fragmented reporting landscape as its formation brings together the Value Reporting Foundation (formerly SASB and the Integrated Reporting Framework) and the Climate Disclosure Standards Board (CDSB – an initiative of CDP). The U.S. Securities and Exchange Commission (SEC) also promises guidance to ensure consistent disclosure of ESG matters.
The survey results illustrate the need for these changes, as ESG disclosure guidance currently being followed varies widely. Some organizations even follow multiple frameworks, such as the Sustainability Account Standards Board (SASB) (45%), Task Force on Climate-Related Financial Disclosures (TCFD) (40%), Global Reporting Initiative (GRI) (39%) and CDP Worldwide (25%).
Standards and frameworks followed also vary between countries, resulting in a lack of consistency globally. For example, U.S. respondents are most likely (62%) to say their organization follows SASB as part of its ESG practices, compared to 47% of U.K. respondents, 40% of German respondents and 30% of French respondents.
U.S. Compliance Departments Are Most Prepared for ESG Reporting
While both European and U.S. respondents agree that ESG reporting is part of the organization’s compliance program (90%, and 86% respectfully), U.S. respondents are more confident in their compliance department’s ability to report on program measures, with 67% saying they are very prepared vs. 50% of European respondents.
Compliance departments in the U.S. are also most likely (54%) to currently hold accountability for ESG reporting, compared to France (46%), Germany (36%) and the U.K. (36%).
About the Survey
Conducted by OnePoll on behalf of NAVEX Global in September and October 2021, the survey included responses from 400 managers and senior level executives across regulatory/financial compliance and HR/corporate compliance in the U.S., U.K., France and Germany, all of whom work at companies with 500 or more employees.
About NAVEX Global
NAVEX Global is the worldwide leader in integrated risk and compliance management software and services. Our solutions are trusted by thousands of customers around the globe to help them manage risk, address complex regulatory requirements, build corporate ESG programs and foster ethical workplace cultures. For more information, visit NAVEX Global’s website.