Public and private companies are finding it a major challenge to determine what environmental, social and governance (ESG) information to disclose, according to a new report from Deloitte.
According to the report, Disclosure of Long-Term Business Value: What Matters?, leading companies already are working to bring reporting on non-financial ESG performance to the same level of maturity as financial reporting. This comes years ahead of any expectation for a movement toward widespread mandated disclosure, the report said.
Six in ten CFOs at large global enterprises believe that sustainability challenges will change financial reporting and auditing, and these companies are looking for ways to leverage these metrics, Deloitte said. Many companies are trying to apply the principle of materiality from traditional financial reporting to ESG performance metrics.
The consultancy said the long-term success of a company is in some part determined by the non-financial intangibles of ESG materiality. Today 55 of the world’s stock exchanges issue sustainability indices, and the evidence of a stock price impact related to ESG performance appears to be getting stronger.