A new survey from integrates risk and compliance software provider NAVEX Global released today indicates that corporate compliance and ESG functions are rapidly converging, and highlighted the need for consistent ESG reporting and measurement standards.
The study, conducted by market research agency OnePoll, included responses from 400 regulatory, financial and HR compliance managers and senior level executives across the U.S., U.K., France, and Germany in September and October 2021. All respondents work at companies with 500 or more employees.
According to the survey results, nearly 90% of the compliance managers and executives reported that ESG reporting is included as part of their companies’ compliance programs. Most of those who responded that ESG reporting is not part of their compliance programs strongly or somewhat agree that it should be included.
The survey also provided insights into the state of ESG reporting in the respondents’ organizations. According to NAVEX, the findings illustrate a need for standardized sustainability measurement and reporting, with companies using a wide variety of frameworks for disclosure, and some following multiple frameworks. By ESG reporting framework or standard, SASB was the most commonly used at 45%, followed by TCFD at 40%, GRI at 39% and CDP at 25%.
Responsibility for ESG reporting varies by organization, with 43% responding that the compliance department is accountable for ESG reporting, followed by finance at 21%, and 9% using a dedicated ESG department.
Environmental and energy factors dominated the ESG issues disclosed by companies, taking up 4 of the top 5 spots for topics included in respondents’ list of reported ESG metrics. Top metrics included Energy Management (47%), Data Security (39%), Greenhouse Gas Emissions (39%), Air Quality (38%) and Waste and Hazardous Materials Management (35%). Only 25% of respondents said that their companies report on Human Rights and Community Relations, and 27% on Employee Engagement, Diversity and Inclusion.
Karen Alonardo, Vice President of ESG Solutions, NAVEX Global, said:
“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. 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.”