Key survey findings
• Descriptor of your company’s current ESG maturity level:
- 11.5% - ESG is a significant driver of strategy
- 22% - Making good progress
- 51% - Basic level or just getting started.
• How many internal and external stakeholders are asking for the company’s ESG data:
- 33.5% - Either a significant number, many, or majority of stakeholders are asking
- 43% - Few stakeholders are asking
• Descriptor of confidence in the company’s ability to tackle ESG requirements over the next 2-3 years considering the ongoing talent shuffle and current economic outlook:
- 32% - Confident or strongly confident
- 22% - Somewhat concerned
Survey findings from webcast polling questions N=667. Responses do not total 100% as each question contains the opportunity to opt out of responding.
What is the SEC’s proposed rule for climate-related disclosure?
“Investors understand that some companies in their portfolios are better positioned to weather the transition from a high carbon economy to a low carbon economy and they are increasingly using emissions information to assess a company’s exposure to transition risks. That’s why there is a need for investor-grade reporting,” said Whittaker.
The proposed rule broadly includes three buckets of disclosure:
- Qualitative disclosure: How has a company identified, assessed and prioritized climate risks? What is its climate risk strategy? How is it performing against its strategy, in addition to disclosures about oversight by the board?
- Disclosure of greenhouse gas (GHG) emissions metrics: A quantitative measure across the company’s value chain. Disclosures are categorized as Scope 1, 2, and 3 (see sidebar).
- Financial statement metrics: Metrics disclosed in the notes of the audited financial statement regarding the impact of climate related events and risks.
“This is a lot to get your arms around,” said Whittaker, “which makes it even more clear that the topic is here to stay. Although private companies aren’t required to comply, their stakeholders will continue to request ESG information. And any company doing business in a jurisdiction where there is some form of regulated disclosure, like the UK and the EU, will need to be in compliance with their rules.”
The message is clear: ESG is here to stay
By raising climate reporting standards to the level of financial disclosure, the SEC is supporting investor efforts to make decisions based on a company’s verifiable climate footprint measures. Companies that were in a “wait and see” mode are taking action to kickstart or renew their focus on their ESG journey.
“Four or five years ago, I started hearing some meaningful ESG questions from investors,” said Korch. “Questions like ‘Do you have an ESG program?’ But it quickly accelerated to ’Do you report to CDP or Morningstar’s Sustainanlytics?’ ‘Can you share your full ESG report with us, and answer our survey?’ And it’s become clear that not providing information can have significant impact on retaining them as investors, and on stock price.”
“At Grant Thornton, we see it from both sides,” said Malzone. “On one side, we see how our clients are working to address ESG information requests from their clients. On the other side, we’re experiencing the same demands. The number of requests we get for ESG information is pretty significant. It’s also important in attracting and retaining employees. We set our goals and provide a publicly available sustainability report that shows our progress.”