Addressing the Strategy Execution Gap in Sustainability Reporting
As global businesses face increasing regulatory pressure to disclose information about environmental, social and governance impacts, risks and opportunities, organizations are set to spend more on ESG initiatives over the next three years. However, most organizations view ESG engagement not only as a compliance issue but also as a valuable tool for enhancing financial performance both now and in the future. Despite this realization, organizations are facing real challenges in delivering against this objective.
KPMG conducted a deep dive on where organizations are investing in the coming years with an eye towards maximizing financial value, while complying with disclosure requirements. Key findings include a focus on investing in ESG talent, prioritizing ESG data and analytics, managing supply chain sustainability, and completing an ESG risk assessment. Enhancing data management is seen as the top way to integrate ESG goals with overall business objectives, but organizations still face challenges integrating ESG strategy into their broader business structure due to resourcing constraints and internal silos between departments.
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Addressing the Strategy Execution Gap in Sustainability Reporting
In the companion deck to this study, we dive further into the details on how organizations are structuring to meet looming ESG challenges overall and at the sector-specific level.
DownloadInvestment in ESG capabilities is top priority
of organizations will increase their ESG investment in the next 3 years
are dedicated ESG personnel, ESG-specific software and ESG-related employee training and education
There is a disconnect between perception and preparedness… Many organizations believe they are ahead of peers regarding ESG reporting, but almost half still use spreadsheets to manage their ESG data
Data management is critical to integrating sustainability goals with overall business objectives
of leading organizations use advanced data systems for ESG reporting
of organizations plan to improve ESG data collection with artificial intelligence
see improving data management and reporting capabilities as helpful in integrating ESG goals with business objectives
anticipate an increase in ESG integration across roles
Structural challenges hinder ability to integrate a sustainability strategy into broader business goals
insufficient resources or capacity to collaborate effectively, internal silos and limited communication between departments, and divergent priorities or goals across functions
are planning to restructure teams to better align ESG goals with business strategy
of core ESG reporting activities are currently or are planned to be outsourced in the next 3 years
Timely and accurate reporting of sustainability information is key for businesses to make strategic business decisions and meet regulatory reporting guidelines, which lead to preservation and growth of financial value.
Maura Hodge
US ESG Audit Leader, Partner Audit, KPMG LLP
Investment in ESG reporting capabilities is top priority
With impending regulatory reporting requirements, organizations are increasing investments in many areas of the sustainability reporting process
Significant areas of investment by sustainability reporting activity
Data mangement is critical to integrating sustainability goals with overall business objectives
Most organizations plan on enhancing their ESG data collection and management systems because the use of advanced software, automation and AI/ML tools can significantly improve ESG reporting efficiencies
Measures being undertaken to be perceivably ahead of others in maintaining transparent ESG reporting
Our ESG Organization Survey underscores the critical role of data in driving sustainability objectives forward and seamlessly integrating these into the overall business strategy.
Rob Fisher
US ESG Leader, Partner Advisory, KPMG LLP
Structural challenges hinder ability to integrate a sustainability strategy into broader business goals
Capacity constraints and internal silos are the top two challenges organizations are facing
Challenges that impede cross-functional collaboration on ESG matters
Organizational restructuring to better align ESG goals with overall business strategy in the coming years
ESG strategy and reporting efforts need to be aligned, therefore organizations are restructuring to achieve this coordination
33%
Yes, definitely - we are planning for a major restructuring to align ESG goals with business strategy
43%
Yes, somewhat - minor adjustments or adaptations in our organization are expected
17%
Maybe - it depends on changes in ESG regulations and market demands
5%
No, not at all - our current organizational structure already aligns ESG goals with business strategy
3%
Unsure - we have not discussed organizational restructuring related to ESG alignment at this time
Steps you can take to improve ESG reporting & strategic integration across your business:
- Set your sustainability ambitions: Collectively agree upon a sustainability strategy for each of your material sustainability topics, establish action plans and determine how to measure success. These actions link sustainability to your business strategy and this information is required for regulatory reporting.
- Invest in ESG talent, including training and education for employees: Improve sustainability reporting capabilities by investing in dedicated ESG personnel who can manage and oversee reporting processes, data collection, and analysis. Broaden access to sustainability information by creating a culture of ESG awareness across all departments through employee training and education programs. This knowledge will help you execute on sustainability goals within the broader business context.
- Design a holistic ESG technology architecture: Sustainability information needs are ever evolving and having a structured, but flexible ESG data architecture, like a data lake, will allow you to adjust efficiently to new and changing reporting requirements.
- Restructure teams to better align sustainability goals with business strategy: Address structural challenges by redefining roles and responsibilities and identifying leaders and subject matter experts for effective implementation and efficient reporting.
- Seek external support: To support internal capabilities and accelerate progress, consider outsourcing core sustainability reporting responsibilities.
How KPMG can help
With extensive experience in reporting and sustainability consulting, KPMG can help organizations streamline their ESG reporting processes, develop a sustainable governance structure, and integrate ESG goals into their overall business objectives. KPMG’s dedicated team of professionals can provide tailored services to help organizations navigate complex ESG standards, optimize data collection and analysis processes, drive sustainable and responsible business practices, and create long-term value.
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