Most large companies are preparing their ESG data and reporting capabilities, with the vast majority planning to increase investments in sustainability-related software and workforce capabilities over the next few years, although most feel confident Although it's ahead of the curve in these areas, nearly half report that they still use spreadsheets to manage their ESG data, according to the results of a new survey released by professional services firm KPMG US.
For its new study, KPMG USA interviewed 550 board members, executives and managers of public and private companies, including about two-thirds with revenues exceeding $1 billion, primarily in North America and Europe, and across a wide range of sectors.
The survey found that as regulatory pressures increase for organizations to disclose sustainability information, increasing ESG capabilities is emerging as a key priority for many companies, with 90% of respondents reporting plans to increase their ESG investments in next three years, with the main areas of investment including dedicated ESG personnel at 43%, followed by ESG-specific software (40%), employee training and education (38%), and data collection and management tools (37%) .
According to KPMG, the study revealed a disconnect between companies' perceived ESG reporting capabilities and their actual preparedness. Most notably, although 83% of respondents reported that their organizations were ahead of their peers in sustainability reporting, many appear to continue to rely on highly manual data collection, with spreadsheets reported by a wide margin as the primary sustainability management system. ESG data used, in 47th position. %, while 38% reported using ERP systems with ESG modules, and only 37% using specialized ESG software solutions and 33% using ESG data management solutions.
While nearly half of companies continue to rely on spreadsheets for their ESG data, the majority report plans to further develop their ESG reporting capabilities in the near future, including 58% who reported they plan to improve their data analysis and consolidation using artificial intelligence and machine learning over the next three years, and 49% said they are currently offering training to employees and managers to improve the quality of ESG reporting.
Tegan Keele, US climate data and technology leader at KPMG, said:
“Artificial intelligence and machine learning technologies can help organizations gain valuable insights from disparate data and make more informed decisions, but AI and ML are not a silver bullet for sustainability reporting or defining strategy that adds value to the business. Decisions about what data to use, what sources to collect the data from, and the type of controls that need to be implemented require a cohesive strategy that must be organization-led and technology-informed, rather than technology-driven.”
In addition to meeting compliance requirements, the survey found that many organizations also view building ESG capabilities as a key tool for improving organizational performance, with “improving ESG data management and reporting capabilities” reported as the top way , by 45% of respondents, to improve the integration of sustainability goals with general business objectives.
Similarly, 83% of companies expect to increase ESG responsibilities in non-ESG roles over the next three years, with the most valuable skills and capabilities in this area including ESG data analysis, supply chain sustainability management, assessment and ESG and carbon risks. emissions management and reporting.
KPMG US ESG Audit Lead Maura Hodge said:
“Timely and accurate reporting of sustainability information is critical for companies to comply with regulatory reporting guidelines. However, compliance alone should not dictate an organization’s strategy – it is critical to focus on the essential elements of ESG that will drive long-term financial value.”
The report also explored some of the key barriers companies face in their efforts to integrate a sustainability strategy into their broader business objectives, with “insufficient resources or capacity to collaborate effectively” emerging as the top challenge, reported by 44% of those interviewed. Delving deeper into this barrier, the survey found that 21% reported difficulty measuring the return on investment in ESG activities and 19% cited budget constraints or competing priorities.
Another important challenge to sustainability integration cited by interviewees was internal silos and limited communication between departments. Namely, to achieve better coordination, more than three-quarters of respondents said they expect to see organizational restructuring to better align sustainability goals with overall business strategy, including 33% who anticipate a “major restructuring.”
KPMG US ESG Lead Rob Fisher said:
“Sustainability affects every part of the business, making it very difficult for large organizations to organize themselves and very easy to have a 'check the box' mentality and only focus on compliance. Organizations that view the new reporting requirements as a further expansion of their broader sustainability strategy and that continue to invest in the right people and technology to advance that strategy will be best positioned to realize and communicate the full value that sustainability initiatives can bring. for your business.”
