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Investors want to see reliable sustainability data from companies—but CFOs have serious doubts about their ability to provide it.
Almost all (96%) of the 2,000 finance leaders EY polled in its Global Corporate Reporting survey reported problems with the nonfinancial data they receive for reporting, such as missing, out-of-date, inconsistent, or unclear data. (Half the leaders surveyed were CFOs.)
Sustainability reporting once was more “narrative-based” and aimed at broad audiences, Velislava Ivanova, EY’s global strategy and markets leader for climate change and sustainability services, said in the report. But now that new regulations have shifted sustainability further into finance’s purview, finance leaders “are primarily concerned about the lack of rigorous, data-enabled reporting,” she said. More than half (55%) of the finance leaders surveyed said “costs would be significant” to comply with the new regulations, and 44% said the task would be “highly complex.”
Finance leaders are also pessimistic about their companies’ chances of meeting their sustainability goals. Fewer than half (47%) said it was “very likely” their companies would make their targets on schedule. And 55% were concerned “to a large extent” that sustainability reports in their industries could be perceived as greenwashing.
Investors seek solid data: Companies’ nonfinancial and sustainability data, the survey suggests, may not be robust enough to satisfy investors. Only 43% of the 815 institutional investors EY polled described the guidance they received regarding companies’ sustainability data as “full and clear” enough to properly assess it. As Jon Hocking, head of investor relations and rating agency management at Zurich Insurance Group, stated in EY’s report, “As soon as you set targets and metrics for an area of sustainability, investors will start to assess your performance in the same way they do financial performance.”
And investors are taking sustainability more seriously. As the survey found, more than four in ten investors (43%) now employ full-time sustainability analysts. One in four expected the number of sustainability analysts to increase by “a lot” over the next two years.