Minutes to read
Transparency and accountability aren’t just buzzwords — they’re essential criteria stakeholders demand. As concerns over environmental, social, and governance (ESG) factors rise, organizations worldwide find themselves in the spotlight, expected to report on these crucial areas.
But how can one ensure that their ESG reporting isn't just accurate but also reliable and credible?
Enter the Workiva platform — a solution that simplifies and optimizes the ESG reporting process.
Let’s look at ESG as a whole – its intricacies, challenges, and best practices – and then discover how the Workiva platform is revolutionizing how companies approach sustainability reporting.
ESG stands for environmental, social, and governance – the three dimensions through which a company's commitment to the environment, sustainability, and ethical practices is assessed.
This framework provides insights into how a company manages its ecological footprint, fosters social responsibility, and upholds governance standards. Within responsible investment, ESG offers a comprehensive lens to scrutinize and ensure a company's actions align with global sustainability goals.
The E of ESG is based on how your organization performs as a steward of nature. This includes how your organization manages waste, uses energy, reduces pollution, views and acts on animal rights, protects land, and uses natural resources.
Here are some specific examples of what your organization could report on particular to the environment:
The S of ESG is based on how your organization interacts with its employees, customers, suppliers, and the communities in which it operates.
Your organization could report on these specific social aspects:
The G of ESG is based on how your organization is managed and controlled. It includes your organization’s ethics, how it reports its financial statements, and how it ensures no malicious activities are present.
Some governance points your organization could report on are:
In its current state, ESG needs more effective controls and guidelines. This brings forth a series of risks that undermine the integrity of your organization and the analysis of its data.
ESG reporting lacks standardized formats, templates, or guidelines. Currently, organizations are reporting information in a free-form manner without adhering to any specific structures or predefined criteria.
Without structured ESG reporting formats, the lack of consistency makes it difficult to compare and analyze data across different reports or periods. This hampers the ability to identify trends, patterns, or anomalies reliably.
Unstructured ESG reporting often leads to a higher degree of subjectivity and interpretation of data. This introduces bias or discrepancies in how information is reported, making it challenging to establish a clear and objective understanding.
It also makes it challenging for investors, business partners, and potential employees to make educated decisions.
The absence of controls and standardized reporting processes increases the risk of errors, inconsistencies, and inefficiencies. Ensuring data accuracy, completeness, and reliability becomes more challenging, which impacts decision-making and overall data quality.
Unstructured ESG reporting makes it difficult to trace the source and validity of reported information, hindering the ability to conduct audits and establish accountability.
In 2023, the Committee of Sponsoring Organizations (COSO) developed the concept of Internal Control over Sustainability Reporting (ICSR). As part of this, COSO provides supplemental guidance that explains and interprets how each principle applies.
The guidance lays out 17 main principles, which guide organizations in their internal controls over sustainability reporting. A few examples include:
Based on the current state of reporting and new guidance, companies must establish an effective control environment.
Controls are designed to provide reasonable assurance that sustainability data is collected, recorded, and reported consistently and transparently. This enhances the credibility of sustainability reporting, facilitates informed decision-making, and meets stakeholder expectations.
Workiva’s ESG Solution is a purpose-built, easy-to-use platform that assists companies with all aspects of the ESG reporting process.
Defining what data points you gather/report on and all associated information is a daunting and time-consuming task. These points include who provides or approves the data, instructions, units, etc.
The structured approach to establishing your ESG Program in Workiva guides you through this process, ensuring you have a clear plan and focus on the right things at the right time.
Using task assignments and notifications lets you drive data providers into the system to enter values for their assigned metrics.
After data providers have entered data into Workiva, reviewers are prompted to review and approve the value before it is finalized.
ESG teams work with a lot of data, which can be challenging to organize. The factbook within Workiva’s ESG Solution makes it easy to gather all your data – current and historic – perform necessary calculations, and format the data to prepare it for your annual report.
Gathering and organizing your narrative information and data points into a cohesive report is made more accessible with Workiva’s suite of document editing, collaboration, and review tools.
Workiva’s ESG Solution makes it much easier to implement internal controls around your ESG process.
The Workiva platform will ensure that the data shared between the teams is accurate and up-to-date.
The Workiva platform will ensure that the data shared between teams and deliverables is consistent to avoid any discrepancies in reporting.
The Workiva platform ensures that only authorized individuals can view and edit the shared data to protect the confidentiality and integrity of the data.
Mastering ESG reporting is no longer a choice — it's necessary for businesses striving to stay relevant in this sustainability-driven era.
Ensuring accurate, consistent, and secure reports is paramount to building stakeholder trust. With the challenges posed by a lack of standardization and the risks of unstructured reporting, solutions like Workiva's ESG platform emerge as invaluable assets.
As we've explored, this platform streamlines data collection, review, and report preparation and reinforces internal controls, ensuring impeccable data quality. As the future edges closer, embracing such robust solutions will undoubtedly set organizations on a path of genuine transparency and accountability.
For those committed to transforming their ESG reporting, Clearview Group's ESG Advisory stands ready to guide you. Get started on your ESG journey.
We are a full-service management consulting and CPA firm covering all aspects of audit, compliance, risk management, accounting, finance, tax, IT risk, and more. Just let us know what you need help with and an expert will be in touch!Request Your Consultation Today