Data and technology hampering integrated financial and sustainability reporting
Over 8 in 10 Australian organisations intend to disclose their emissions data irrespective of any political developments, but many struggle with living up to their ambition – mainly due to challenges in data and technology. That is according to research from Workiva.
The research, which survey 1,600 leaders worldwide including in Australia, found that 81% of Australian executives are committed to disclosing greenhouse gas emissions irrespective of any political developments that unfold within the nation. Meanwhile, at the other end of the spectrum, ‘only’ 17% of Australian leaders said that they have no plans to disclose their emissions data, much lower than their counterparts in countries such as the US and Germany.
“That the majority would disclose emissions irrespective of policy is a great outcome, and shows that an understanding of the benefits of emissions reporting is becoming embedded,” said Narain Viswanathan, Country Leader Australia and New Zealand at Workiva.
“The finding also shows that Australian organisations overall are ahead of some of the world’s largest economic powers in climate disclosure,” added Mark Mellen, Sustainability Principal at Workiva. “This may be due to climate disclosure requirements being more imminent in Australia than in other countries.”
The (other) benefits of climate reporting
While most of the attention of climate impact disclosure goes to compliance, the surveyed leaders told Workiva’s researchers that there are several other benefits that come with sustainability reporting. 97% of leaders agreed that a strong sustainability reporting program will give businesses a competitive advantage in the next two years.
A similar number of leaders said that integrated financial and sustainability data can help identify performance gaps that enhance financial growth opportunities, while 96% of institutional investors agreed that integrated reporting enables better decision-making that can improve a company’s financial performance.
“In a rapidly changing world, businesses that can effectively integrate finance, sustainability, and investor relations are better positioned to thrive,” said Jane Diplock, Member of the Supervisory Board of the Global Reporting Initiative.
“Investors are now focusing on companies that not only deliver solid financial returns, but also who correctly assess risks and opportunities, and positively contribute to society and the environment. Companies that embrace this integrated approach will likely benefit from stronger investor confidence, a more loyal customer base, and enhanced resilience to future risks.”
Aligning with that belief, the report found that 94% of Australian organisations currently integrate reporting, with 5% planning to do so within 12 months.
Mellen commented: “As executives across Australia further embrace sustainability as a profitability driver, they understand that ESG initiatives can deliver both environmental and financial benefits. In doing so, their organisations are able to make environmentally friendly decisions while significantly improving operational efficiency and cutting down costs.”
The execution bottlenecks
Asked about the main bottlenecks they face in delivering their integrated reporting ambitions, an alarmingly high number of leaders said that they question the adequacy of their technology and data infrastructure.
94% of Australian executives highlighted that the business reporting technology their company currently uses is insufficient for complying with new climate regulation; this is well above the global average of 73%. Additionally, around a third (33%) of Australian executives said that they do not fully trust their financial data, compared to just a quarter of their global counterparts.
Further, nearly a third do not trust their sustainability data. And there are even lower levels of confidence in internal controls and risk assessment for both financial and sustainability data.
“Leaders across Australia need to look at how they can best upgrade their systems so that they can trust their reporting and data and, ultimately, trust the new tools available to them such as artificial intelligence to make the most of it,” noted Viswanathan.
“To close the gap and produce trusted disclosures that support their organisations’ growth objectives, leaders need to have confidence in both their financial and sustainability data. To achieve this, it is critical to establish effective governance over data management, controls, and tools.”
Headquartered in the US, Workiva is one of the globe’s largest providers of systems for finance, accounting, sustainability, risk and audit teams. Over a dozen major consulting firms are a partner of Workiva, including Accenture, BearingPoint, Capgemini Invent, Deloitte, ERM, Forvis Mazars, KPMG, NTT Data, PwC, and Slalom.
