Global professional services firm EY announced the publication of its 2021 EY Global Corporate Reporting Survey, exploring the views of corporate CFOs and finance executives around the world on key emerging and developing issues in corporate reporting. The survey indicated that most finance leaders are in favor of mandatory ESG reporting standards to provide consistent sustainability disclosures, while also revealing gaps between corporate finance professionals and investors on some key ESG reporting issues.

For the study, EY surveyed over 1,000 chief financial officers (CFOs) and financial controllers of large organizations. Survey respondents spanned 26 countries across the Americas, Asia-Pacific, Europe, the Middle East, India and Africa, and 14 sectors, and represented both publicly listed and privately owned companies.

One of the key findings of the survey was an increasing drive towards expanding the role of corporate reporting to include ESG and nonfinancial factors relevant to a broader set of stakeholders. 70% of respondents said that ESG reporting has become a “significant” or “very significant” part of their roles and responsibilities, up from 63% in EY’s 2020 survey. Approximately three quarters reported that the need to demonstrate performance against ESG factors has accelerated over the past 18 months. By factor, 72% of CFOs said that environmental reporting is more important today than prior to the COVID-19 pandemic, while 74% said the same of social reporting, and 73% of governance reporting.

Looking forward, the survey found momentum shifting towards a future of integrated reporting that includes financial and sustainability factors. 74% of survey respondents reported seeing an acceleration towards and enhanced reporting model that encompasses both financial and ESG reporting.

Addressing the need for consistent and comparable sustainability reporting, 76% of the executives surveyed believe that the development of standards for measuring and communicating ESG performance by policymakers would be helpful, and 74% backed mandating reporting of ESG performance against globally consistent standards.

Marie-Laure Delarue, EY Global Vice Chair – Assurance, said:

“There is no doubt that the drive towards improved sustainability reporting is gaining momentum in businesses around the world. Companies increasingly recognize the crucial need for globally consistent standards; and they can see the benefits of making the rules compulsory.”

The survey also explored the finance leaders’ views on the current challenges in providing useful and effective ESG disclosures, uncovering a gap between the executives and the views of investors, as discussed in another recent EY survey. 38% of the finance execs listed the lack of focus on material issues that really matter as a key issue compromising the usefulness of corporate ESG disclosure, well behind the 50% of investors citing this factor. Similarly, the 39% of the finance leaders identified a disconnect between ESG reporting and mainstream financial information (compared to 46% of investors), and 38% cited a lack of information on how companies create long term value (vs 50% of investors).

As the requirement for ESG reporting increases, the finance leaders indicated a need for investment in data and analytics solutions to provide the necessary information. When asked to identify the top prioritized technology areas for investment, Advanced analytics or predictive analytics was the most often cited, at 39%, followed by cloud-based enterprise planning and forecasting tools at 38%.

Tim Gordon, EY Global Financial Accounting Advisory Services Leader, said:

“The skills gap in relation to data is clear and needs to be addressed urgently if companies are to make progress on corporate reporting. We know that finance leaders recognize the need to develop their business’ understanding of advanced technology and data analytics, but what’s needed now is action to ensure that businesses are future-proofed.

“Finance functions and their leaders have a critical role to play in advancing this change. The COVID-19 pandemic has been unsettling in many ways, not least in terms of the impact it has had on working patterns. It has also shown finance leaders how agile their teams can be in responding to major disruption. There’s a real chance now for finance leaders to harness that momentum to engage on the ESG agenda across their organizations including their C-suite peers while building out the skills and technology they need to deliver enhanced reporting.”

Click here to access the EY survey.