Recent research conducted by KPMG has revealed a stark reality: a considerable proportion of global companies lack readiness to fulfill ESG data assurances. Despite stringent requirements for such entities to disclose this information, whether presently or in near future, up to 75% of companies fail to secure third-party assurance for their publicised ESG data. The revealing study was conducted among senior executives and board members of 750 companies representing a diverse field of industries, geographical regions, and revenue magnitudes.
One valuable outcome of KPMG’s research presented respondents in a particular hierarchical fashion. In this classification schema, the top 25% of respondents, who demonstrated notable traction in ESG assurance readiness, were categorized as “Leaders”. The subsequent 50% fell into an intermediate tier, evidencing their journey towards compliance progress, albeit with room for considerable upswing.
An in-depth examination of the research findings points to an undeniable exigency for businesses to swiftly ramp up their ESG assurance efforts, particularly in light of forthcoming regulatory mandates. A failure to prepare for these ESG data assurance requirements would not merely lead to regulatory reprisals but could significantly affect the companies’ corporate image, stakeholder relationships, and even credit ratings. The onus, now, rests on these corporations to reassess their sustainability strategies, to enhance transparency, and to actively engage in sustainable practices that can assure the reliability of their disclosed ESG data.
This requirement isn’t applicable to every corporation but primarily those with specific revenue thresholds and particular operations scales. Albeit, the increasing pressure from institutional investors and the broader public for transparency and accountability in businesses’ sustainability practices makes it inevitable for every company, regardless of its size or industry, to ensure its preparedness for such ESG data assurance requirements.