ESG Reporting Software | Deloitte Insights

In recent years, many companies have also come under scrutiny for their compliance with social values ​​such as diversity, equity, and inclusion (DEI), biodiversity conservation, and ethical practices. Again, companies can choose from dozens of voluntary frameworks, leveraging a wide range of inputs to arrive at statistics that often paint a positive picture of their company.⁷

In fact, a global survey of business leaders found that the most commonly cited barrier to ESG adoption was the lack of consistent, standardized data.⁸ Deloitte expects new regulatory requirements and deliverables designed to their specifications to establish de facto standards and drive adoption. These regulations will come into force within the 2024-2025 period, primarily in the EU and the US, the UK, Hong Kong, New Zealand and other countries.⁹

The EU’s Corporate Sustainability Reporting Directive (CSRD) updates the 2014 Non-Financial Reporting Directive (NFRD), increasing the number of companies required to make sustainability disclosures from around 12,000 to more than 50,000. I am.^Ten It also imposes requirements regarding “double materiality.” This means companies will need to report on the impact of their ESG initiatives on their business and on environmental, human rights, social standards and sustainability-related risks.¹¹ The CSRD applies to multinational companies whose activities in the EU have generated an annual turnover of more than €150 million in the past two years. These European subsidiaries may also be required to provide an integrated report on the parent company’s activities to the EU.

In the United States, a proposed rule from the Federal Acquisition Regulatory Commission would require certain federal contractors to disclose their greenhouse gas (GHG) emissions and climate-related financial risks, as well as science for reducing emissions. We are required to set goals based on¹² California’s recently enacted Climate Change Responsibility Package imposes Scope 3 reporting requirements on companies with revenues of more than $1 billion that do business in California.¹³

The SEC is addressing ESG reporting requirements for many registered funds and investment advisers. Its proposed rule, “Enhancing Disclosures by Certain Investment Advisers and Investment Companies Regarding Environmental, Social, and Governance Investment Practices,” would provide a consistent, comparative The aim is to promote possible and reliable information. .¹⁴

Under the enactment, companies subject to EU CSRD regulations will be required to submit reports in 2025 that reflect data from the 2024 financial year. The rule extends reporting requirements to smaller and mid-sized companies by 2026, expanding the total addressable market and revenue opportunity.¹⁵

Finally, CSRD and proposed SEC compliance also require third-party assurance of ESG reporting. Auditors will play a greater role in guiding companies on ESG frameworks, standards, disclosures and other opportunities. Taken together, these regulatory activities suggest that now is the time to implement a robust and comprehensive ESG tracking and reporting software solution.