75% of companies aren’t ready for climate assurance
Here’s a note from Andreas Rasche:
75% of companies do not believe they have the right policies, systems and skills to be ready for ESG assurance. This reflects that CSRD and also the (still debated) SEC Climate Rule first of all require building up capacity and strengthening internal ESG governance.
Three key insights from the KPMG Study (n=750):
1. Only 26% of firms have a robust audit trail for their sustainability information. Without such trails, it will be difficult to substantiate information. Problem here is that ESG data is more dispersed internally making the creation of audit trails more challenging.
2. Even among what the study calls ‘leading companies’, only 54% say that their board has sufficient knowledge on ESG assurance. This points to the urgent need to develop knowledge/skills, especially in light of CSRD/ESRS directly defining new ESG-related tasks for boards (https://lnkd.in/e-PsCYJu)
3. Larger companies have higher ESG assurance readiness scores. Not surprising, but shows the need to support mid-sized firms in more targeted ways when building up capacity. Trying to make mid-sized firms exempt from regulations (like Germany tries with CSRD) is not the way forward.
Regulations and compliance alone won’t fix the problems we are having with ESG data. We need better governance, more internal capacity, and better knowledge/skills among executives and boards.