Press release

9 Dec 2021 London, GB

Three-quarters of companies champion enforced global standards for environmental reporting

LONDON, 9 DECEMBER 2021: Businesses around the world are strengthening their support for globally consistent and enforced standards on environmental reporting, but many still have some way to go to improve their own efforts, according to the 2021 EY Global Corporate Reporting Survey.

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  • 76% of finance leaders in companies around the world back call for globally consistent standards for environmental, social and governance (ESG) reporting
  • 74% of finance leaders agree that improved nonfinancial reporting is accelerating, driven by COVID-19 pandemic
  • Finance leaders urged to look at current approach to ESG reporting; do more to advance ESG agenda; and develop people and technological capabilities

Businesses around the world are strengthening their support for globally consistent and enforced standards on environmental reporting, but many still have some way to go to improve their own efforts, according to the 2021 EY Global Corporate Reporting Survey.

The report, now in its eighth year, canvasses the views of more than 1,000 finance leaders from companies spanning 14 sectors and 26 countries. It shows that 76% of finance leaders, across some of the world’s major companies, now back the need for globally consistent ESG standards, and that 74% believe these standards must be mandatory.

In addition, the report looks at how businesses need to adapt in the face of major challenges, including the COVID-19 pandemic and technological change, in order to provide enhanced reporting. It also examines the role that finance functions can play in achieving this.

Accelerating the pace of change in corporate reporting

The findings follow the COP26 announcement of the new International Sustainability Standards Board (ISSB), which will develop a comprehensive global baseline on sustainability disclosure standards to meet the needs of investors around the world.

According to the survey, nearly three quarters (74%) of finance leaders say they believe that the move toward better nonfinancial reporting is gaining momentum, and many cited the COVID-19 pandemic as a key factor in this acceleration. There is also a strengthening view among finance leaders that ESG is a significant part of their role – 70% of those surveyed believe this to be the case now, up from 63% last year.

However, the survey also highlights a number of challenges that companies face in providing useful ESG reporting. Thirty-nine percent say there is a disconnect between ESG reporting and mainstream financial reporting; 38% pointed to a lack of focus on material issues; and the same proportion observed that there is a lack of information on long-term value. A third (33%) said they believe that a lack of real time information is an obstacle, while 32% highlighted the absence of any forward-looking disclosure.

Finance leaders say that the No. 1 barrier to producing useful ESG disclosures is “getting clarity from investors on what they want from ESG reporting.” In addition, the survey exposes a gap between the views of companies on the usefulness of their reporting and the perspective of investors, who use the information from companies to make decisions on their portfolios. 

For example, 50% of investors surveyed in the EY organization’s recent Institutional Investor Survey are worried about the lack of focus on material issues, and 51% worry about the level of information available on long-term value. Investors are also more likely than corporations to want mandatory global standards – 89% compared to 74%, according to the same study.

Marie-Laure Delarue, EY Global Vice Chair – Assurance, says:

“There is no doubt that the drive towards improved sustainability reporting is gaining momentum in businesses around the world. Companies increasingly recognize the crucial need for globally consistent standards; and they can see the benefits of making the rules compulsory.

“But there is a steep mountain to climb. If businesses are going to meet the needs of investors and other key stakeholders, and if they are going to build real trust in the data, they need to give ESG reporting the same prominence as financial reporting. There is a vital role for finance teams to play here, but it’s no mean feat and will need a much more acute focus on material issues.”

Tim Gordon, EY Global Financial Accounting Advisory Services Leader, says:

“Companies are clearly starting to address the challenges that they face on sustainability reporting, but there is an urgent need for them to do more. Finance leaders need to be clear on the role they and their teams can play within their organizations. They should also look at how they can drive transformation and collaborate more effectively across their organizations from board members to chief sustainability officers to demonstrate how long-term value is being created.”

The 2021 EY Global Corporate Reporting Survey also highlights an urgent need for companies’ finance teams to address major obstacles to improved reporting. Asked to name the primary challenges to producing useful and effective ESG data and disclosures, 31% mentioned a lack of reliable systems for aggregating and analyzing ESG data.

There is also a clear need to address issues with talent and skills. Seventeen percent of the leaders questioned said that the main problem they face is that that finance professionals appear unwilling to adapt to changing needs, while 16% pointed to a skills shortage in relation to data, and 12% were concerned about a lack of technology to address current and future challenges.

To address their data needs, businesses are prioritizing investment in analytics, with planned spending across several key areas including advanced and predictive analytics (39%), cloud-based tools (38%), AI (36%), robotics/automation (29%) and blockchain (25%).

Gordon says: “The skills gap in relation to data is clear and needs to be addressed urgently if companies are to make progress on corporate reporting. We know that finance leaders recognize the need to develop their business’ understanding of advanced technology and data analytics, but what’s needed now is action to ensure that businesses are future-proofed.

“Finance functions and their leaders have a critical role to play in advancing this change. The COVID-19 pandemic has been unsettling in many ways, not in least in terms of the impact it has had on working patterns. It has also shown finance leaders how agile their teams can be in responding to major disruption. There’s a real chance now for finance leaders to harness that momentum to engage on the ESG agenda across their organizations including their C-suite peers while building out the skills and technology they need to deliver enhanced reporting.”


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About the survey

How do you transform data into insight? surveyed more than 1,000 CFOs and financial controllers of large organizations to understand the challenges they face in corporate reporting. The research was conducted by Longitude on behalf of EY Global Financial Accounting Advisory Services (FAAS). More than half of respondents (51%) were from the CFO community, with more than one-third (34%) of respondents representing financial controllers. The remaining 15% of respondents were finance directors or leaders in the treasury function. A majority (57%) of respondents’ organizations have revenues in excess of US$5b a year, and 9% in excess of US$20b a year. Respondents were split across the Americas; Asia-Pacific; and Europe, the Middle East, India and Africa (EMEIA). Fourteen main sectors were represented, with 54% of respondents’ companies being publicly held or listed and 46% privately owned. The survey was supplemented by in-depth interviews with CFOs and heads of reporting organizations, as well as EY subject-matter professionals.