While virtually all respondents reported some
level of progress over the past year toward their sustainability
goals, challenges remain
NEW
YORK, July 18, 2024 /PRNewswire/ -- More than
three-quarters of executives have seen significant or moderate
progress towards their sustainability goals in the past year,
according to Deloitte's 2024 "Sustainability Action Report." The
survey of 300 senior business leaders across industries details
their approach to and integration of environmental, social, and
governance (ESG) measures. The findings reveal that mandatory
reporting requirements are prompting many companies to strengthen
their focus on integrating sustainability into strategic planning,
risk management and data governance.
From a strategic focus on capacity building, to navigating
challenges of ESG data quality, the 2024 report explores companies'
current ESG mindset and the benefits that can be realized from
acting now to strengthen trust with stakeholders and prepare for
regulation.
"Sustainability reporting and transparency can drive trust with
stakeholders and is now subject to assurance and regulatory
scrutiny in many jurisdictions," said Kristen Sullivan, Audit & Assurance partner,
and US Sustainability and ESG marketplace leader, Deloitte &
Touche LLP. "By strengthening sustainability governance and
capabilities, organizations can prioritize performance on material
sustainability impacts, risks and opportunities, and unlock
strategic insights to help capture market value and stakeholder
trust."
Executives recognize the business benefits of sustainability
reporting
The last year saw significant shifts in the
sustainability landscape, with the US Securities and Exchange
Commission (SEC) adopting final rules on climate-related
disclosures and more extensive requirements mandated by the
European Union. Despite legal challenges with the SEC climate rule,
many organizations are investing in sustainability reporting as
they aim to recognize tangible business benefits both internally
and externally.
More than half (51%) of respondents cited greater efficiencies,
reduced risk, and enhanced trust with stakeholders as the top three
internal business benefits influenced by investing in
sustainability reporting. Brand reputation and enhancement (20%) is
the top business outcome respondents expect to see from enhanced
ESG reporting. Another 15% expect enhanced talent attraction and
retention and 14% seek to realize pricing premiums for their
products, highlighting how ESG reporting can influence external
perceptions of the company. These findings demonstrate the
multidimensional value that can be derived from high-quality
sustainability reporting—from driving operational efficiencies to
performance enhancement and stakeholder trust.
Investment in sustainability capabilities is on the rise
across organizations
Companies are continuing to
strategically integrate ESG into their workflows and
shore up talent with relevant skillsets to meet
demands for more rigorous disclosure. Virtually all (99%) of
respondents reported they are preparing for potential increases in
sustainability requirements and 77% are creating new roles and
responsibilities as a result.
Additionally, more than half (52%) report having created a
cross-functional ESG council or working group, down from 57% in
December 2022. This slight decrease
reflects the fact that many organizations have already established
these governance mechanisms. Those with an already established
cross-functional ESG group were more likely to make significant
progress on their sustainability goals (38%) than those without
(10%).
"Regulatory requirements and the evolving risk landscape have
prompted many organizations to fill sustainability experience gaps
in the C-suite, boardroom, and beyond," said Evan Harvey, Audit & Assurance managing
director, Deloitte & Touche LLP. "The emphasis on talent and
change management is becoming apparent as sustainability governance
and oversight become more of a strategic priority."
Data quality continues to be a challenge
As companies
increase capacity and experience to prepare sustainability
reporting, many gain a deeper appreciation of the complexities and
challenges with data quality. More than half of respondents cited
data quality (57%) as their top challenge, and 88% report it as a
top three challenge. Similarly, 81% of respondents cited
documentation and sign off as a top challenge.
Seventy-four percent of respondents are currently prepared to
disclose Scope 1 greenhouse gas (GHG) emissions —up from 61% in
December 2022 and 58% in March 2022. Still, there is progress to be made,
particularly in the consumer products (52%) and oil and gas
industries (48%), which report being the least prepared to disclose
Scope 1 GHG emissions. Similarly, private companies report slower
progress in disclosing their Scope 1 GHG emissions.
Only 15% of respondents are currently preparing and disclosing
Scope 3 GHG emissions. The top challenges highlighted by
respondents include a lack of confidence in the data they receive
from vendors (64%), as well as a lack of consistent industry
standards and methodologies (50%), complicating their ability to
measure consistently.
More companies are obtaining assurance
As
organizations look to improve the quality and value of
sustainability reporting, respondents indicated progress in
obtaining assurance over their sustainability data, with 99% of
respondents planning to obtain assurance or engage in assurance
readiness. At this point, 80% of respondents indicate they are
taking steps to move from limited to reasonable assurance, though
only 13% have completed their evaluation of the next steps to take.
Market practice among private companies suggests a different story,
however, with 72% of respondents indicating they haven't completed
their review of next steps. Similarly, private companies aren't as
mature in their assurance readiness, with only 30% already
obtaining assurance, compared with 39% of public
companies.
To see how your company's ESG readiness measures up, Deloitte's
ESG SelfAssess™ tool can help navigate the complexities of the
quickly evolving regulatory environment. Learn more here.
About the survey
Deloitte commissioned an online
survey in January 2024 of 300
executives at publicly owned companies with a minimum annual
revenue requirement of $500 million
or more, as well as conducted interviews to increase the total
sample size to 250 in each of the following industries: consumer
products; financial services; life sciences and health care; oil
and gas; and technology, media and telecommunications. Each
industry oversample surveyed a mix of public and private companies,
with a minimum of at least 100 publicly owned companies. Executives
are defined as senior finance, accounting, sustainability, and
legal executives with a minimum seniority of director, or chief
risk officers, general counsels, chief legal officers, or chief
sustainability officers.
About Deloitte
Deloitte provides industry-leading audit, consulting, tax and
advisory services to many of the world's most admired brands,
including nearly 90% of the Fortune 500® and more than
8,500 U.S.-based private companies. At Deloitte, we strive to
live our purpose of making an impact that matters by creating
trust and confidence in a more equitable society. We leverage our
unique blend of business acumen, command of technology, and
strategic technology alliances to advise our clients across
industries as they build their future. Deloitte is proud to be part
of the largest global professional services network serving our
clients in the markets that are most important to them. Bringing
more than 175 years of service, our network of member firms spans
more than 150 countries and territories. Learn how Deloitte's
approximately 457,000 people worldwide connect for impact at
www.deloitte.com.
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