April 11, 2024
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Changes are coming to ESG reporting standards, and companies need to be ready. The upcoming climate-related financial disclosures legislation will mandate that sustainability reporting be as rigorous as financial reporting, with both reports released at the same time. 

While some companies have been working to ensure they can meet the simultaneous timeline requirement, many aren’t yet ready for compliance. But there’s still time to prepare for the new mandates. And it begins by identifying and closing the efficiency gap.

Why the lag in sustainability reporting?

A recent survey of ASX 200 and NZ 50 companies—conducted by Atticus in partnership with AIRA—found that more than 30% feel unprepared for the changes. IR professionals report multiple challenges with current processes, such as a difficulty in gathering reliable data across departments and from third party suppliers and limited availability of assurance resources (both internally and across the industry). 

The white paper revealed that although over half of companies already release financial and sustainability reporting simultaneously, sustainability reports typically take longer to prepare, “which lags end of year results by about a month” according to one respondent.

By identifying and closing these gaps in timelines, companies will be better placed to meet the new standards. For 80% of surveyed companies, the answer involves upgrading internal data collection and assurance processes. 

How to resource for efficiency and data quality.

1. Automate data collection and verification processes.

For 60% of companies, data collection and verification is currently conducted manually. This is risky, as manual data collection increases the likelihood of human error, resulting in sustainability reports that are late or lack rigour. 

To solve for this, consider automating manual processes such as your utility and invoice management, employee surveys, materiality assessments, or report verification. Lean on business operations teams who can support you to find automation opportunities before the busy EOFY period, when both annual reports and sustainability reports will be due. Choose the area with the largest efficiency gap, and improve the others over time.

2. Set teams up for cross-functional success. 

The requirement to release sustainability and financial reporting simultaneously represents a huge project involving multiple teams. Usage data from Atticus indicates that sustainability reports typically require twice as many users and nearly 160% more verified annotations when compared to all other document types aside from annual reports. Managing both reports at once will require seamless cross-functional alignment and input from multiple levels of management. 

One way to set teams up for success is to start small by implementing easy-to-use software that supports collaborative, digital workflows. Consider your own current technology stack. Which tools support cross-functional work? Could these be leveraged further? Are your teams able to balance speed and quality? Or do they rely on clumsy manual processes to collect, analyse, and verify data? It becomes much easier to standardise processes and produce quality outputs with effective tools that teams enjoy using.

3. Educate executives to generate buy-in.

For a successful transition, budget allocation to implement new processes is crucial. Internal education generates buy-in, and is a priority for 70% of surveyed companies. This means putting ESG reporting on meeting agendas, and actively raising it as an area of concern with risk teams, C-suite executives, and board members. 

“This is an organisation-wide issue,” says Terence Jeyaretnam—Asia-Pacific Climate Change and Sustainability Services at EY and AASB Board Member. “The earlier you raise the profile of this risk [the better]. Engage the board in it… to influence the top echelons of the organisation in order to get the help and resources. Make sure it’s on the agenda.”

Schedule regular meetings with your CFO to communicate team needs and highlight the importance of well-resourced ESG reporting. Companies that are proactive in upgrading their internal systems will be best-prepared for the upcoming mandates. If decision-makers understand the wider implications of the new requirements, budget allocation for system upgrades becomes easier. The message is simple—this is a chance to become a leader in ESG reporting, and enjoy the reputational and market benefits that come with it.

How Atticus can help.

Data verification is a critical step on the pathway to assurance, and semi-automating this process is a key strategy to support readiness.

Atticus’ verification software helps streamline the efficiency, accuracy, and quality of reporting by: 

  • Ensuring each claim in your sustainability report is supported with high-quality evidence.
  • Improving project management through clear task allocation and a dashboard that provides status updates of each person’s jobs to be done. 
  • Reducing bottlenecks by enabling multiple people to verify the same document in real time.
  • Facilitating multiple levels of approval and feedback from many stakeholders.
  • Safeguarding against human error by building in standardisation to verification practices.
  • Boosting team productivity and morale with an easy-to-use tool.

To learn more about our verification software, request a demo with our team or download the sustainability reporting factsheet below.

Resource: Sustainability verification factsheet Resource: Sustainability verification factsheet