Corporates hit by wave of new sustainability reporting rules: ‘It is a leap’
Senior figures at PwC told an industry conference corporates are rushing to adapt to a range of incoming sustainability reporting standards
The narrowing timeframe of incoming mandatory sustainability reporting regulations means firms must act fast to adapt.
At least that was the warning from Joanne Dunkason, a senior manager at PwC UK, during an industry gathering in the City of London.
Dunkason told delegates how pressure may be the heaviest on UK corporates, with the British government recently confirming plans to endorse mandatory reporting to the International Sustainability Standards Board (ISSB) and the creation of a national green taxonomy.
In addition, many UK firms are also expected to comply with upcoming EU legislation, namely the Corporate Sustainability Reporting Directive (CSRD), albeit this is on a voluntary basis.
“There is a lot going on in the sustainability reporting landscape, and there are a lot of voluntary standards out there. Looking forward over the next two to three years, it's going to look very different as new incoming standards become finalised, and the voluntary standards are cemented within these formal reporting standards," Dunkason shared.
“Obviously the step up from voluntary reporting right now to this mandatory reporting is a leap," she said.
The remarks were made during software firm Workiva’s Accelerate Conference at a panel on the roadmap for reporting integration, which was held at the iconic Gherkin building in London's financial district.
During the event, Workiva released results from an investigation into how European organisations are approaching the CSRD, with a vast majority (94%) of 500 European finance leaders surveyed working to become compliant by its implementation in 2024.
However, more than one third of respondents admitted to feeling overwhelmed and exceeding their capacity during the previous reporting period.
“The CSRD mandate is already having a significant impact on the reporting landscape," said Erik Saito, senior vice president and general manager of EMEA at Workiva.
"Many reporting teams are at or near capacity and will be challenged by the workload pressure of additional CSRD reporting requirements, including additional disclosure and auditor assurance," he told delegates.
Despite the CSRD mandate requiring companies to integrate both financial and sustainability information into their annual reports, only 10% of those surveyed were found to be currently working to improve collaboration between finance and sustainability.
On the integrated reporting an assurance journey, Richard Bailes, UK leader for governance, risk, compliance & controls at PwC, laid out a five step process.
Critical to this was the third stage, he stressed, during which sustainability directives and other ‘non-financial reporting’ is integrated using automation processes.
“The battleground that most of us are dealing with today is this stage three, which is looking more at the non financial or ESG or sustainability related disclosure requirements," Bailes explained.
"So building a taxonomy that meet standards around this and hooking it into an automated system is something I'm sure we're all fascinated with."
Dunkason also reiterated that there was not a “particularly long timeframe” for the implementation of many of these reporting standards, in comparison to previous regulations such as IFRS 15 and 16 which saw delays and extensive time for firms to prepare for their rollout.
In March of this year it was reported that more than 70% of business leaders in the US are not waiting for the country's Securities and Exchange Commission (SEC) to finalise its new climate disclosure rules and will proceed with compliance regardless of when the new regime becomes law, according to a survey commissioned by Workiva and PwC.