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Controllership strategies for ESG reporting

Four potential key focus areas for ESG regulation preparation

The environmental, social, and governance (ESG) disclosure and reporting risk landscape has changed. Globally, regulators have issued or proposed new rules mandating ESG disclosure, and ESG reporting has implications for your organization’s people, processes, internal controls, and technology’s enablement to meet expectations and efficient timelines.

Controllership is uniquely positioned to help design and implement efficient responses to the new risk calculus. And if your controllership responsibilities extend across multiple jurisdictions— domestically or internationally—you’ll need a view into what those continuously changing requirements are, as well as processes and internal controls that are thoughtfully developed, repeatable, and sustainable.

Getting this all done is no small task. But you can reduce complexity by approaching your preparations along four potential key dimensions: multi-jurisdictional reporting requirements, technical accounting, data collection, and business insights. Read on to get an overview and download the report.

Controllership’s role in building an integrated ESG reporting strategy

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Multi-jurisdictional reporting requirements

The reporting landscape is shifting rapidly. At home and abroad, governments and regulators are introducing proposed or final ESG disclosure mandates.

To stay on top of changing reporting responsibilities, you need to know what’s required. We recommend identifying:

• Jurisdictions you operate in (e.g., cities, states, countries, regions)

• Regulations proposed or final in those jurisdictions

• Timing of the proposed or final regulation, including the company’s required implementation date

• Due date for submission of proposed regulations, along with periods to present (i.e., retrospective reporting or current period only) and reporting frequency

• Which standards and frameworks apply

• How to efficiently address multi-jurisdictional mandates with overlapping requirements

• Overlap and integration with existing financial reporting requirements

Report highlights:

• Navigating decentralized reporting responsibilities

• Using technology to manage multiple standards and frameworks

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Technical accounting

ESG disclosure may not be accounting for information in a currency, but it’s accounting just the same. The technical considerations for ESG information present similar academic questions as found in financial reporting standards such as generally accepted accounting principles in the United States (US GAAP) or international financial reporting standards (IFRS). To add complexity, the outcomes, or considerations sometimes in ESG accounting don’t align with those reached in financial reporting standards.

Controllership should see itself as a business partner, not an adversary, to their sustainability function. Mutual respect and understanding will be paramount to achieving the collective objective of preparing information in a way that’s in accordance with maturing technical accounting for ESG information.

Report highlights:

• Sharpening your team’s technical accounting skills for new ESG standards and frameworks

• Using technology to manage multiple standards and frameworks

• Enhancing your internal control environment

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Data collection

ESG data aggregation is a complex undertaking. The volume of information to gather can be significant.

For example, The European Union’s Corporate Sustainability Reporting Directive, includes 82 disclosure requirements (quantitative and qualitative) representing over 1,000 different data points. That information may need to be pulled from a wide variety of systems by different people in different locations, not all of them in the same language. And it all needs to happen timely and in line with appropriate policies.

Report highlight:

Identifying data sources and strategy for incorporation into reporting

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Business insights

As companies mature and begin building ESG information into their overall sustainable business strategy, senior management will likely look to the controllership team to share quality data they can use to (1) set goals and monitor progress, and (2) monitor their response to sustainability risks and opportunities. Helping management tactically achieve the company’s vision layers another responsibility for the controllership team on top of compliance with reporting requirements.

Controllership should confer with relevant constituents involved in strategy and risk management to understand the sustainability strategies they currently have or aspire to build. Determine how the strategies relate to any mandates (regulatory or voluntary) for reporting goals and progress.

    A holistic view of ESG reporting

    Each of these dimensions—managing reporting requirements, tackling the technical accounting, sourcing complex data sets from various sources, and enabling strategy—touches on multiple business functions. What’s more, each one intersects with the other three. This means you’ll need different disciplines and levels of experience to help carry out ESG reporting in a way that’s efficient, cost effective, and supportive of your ability to be a good business partner to others in the organization.

    There’s no single template for what that ecosystem looks like. The extent to which you need to create new roles and responsibilities, build, or enhance ESG information processes, and bring technology into the equation is unique to your organization. But if you approach it holistically, enlisting the help of colleagues across and outside the organization, you can bring order to potential chaos while further enhancing the controllership function’s reputation for excellence in the organization.

    Want to learn more? Download the report for deeper insights and topic analysis.

    Contact us

    To learn more about how to approach your ESG program, contact us.

     
     
     
     
     
     
     
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    Get in touch

    To learn more about how to approach your ESG program, contact us.

    Lauren Pesa
    Audit & Assurance Partner
    Accounting & Reporting Advisory
    Deloitte & Touche LLP
    1 312 486 4647

       

    Kajal Shah
    Audit & Assurance Partner
    Accounting & Reporting Advisory
    Deloitte & Touche LLP
    +1 408 857 6186

       

    Mike Lund
    Audit & Assurance Partner
    Accounting & Reporting Advisory
    Deloitte & Touche LLP
    1 312 486 1942

       

    Drew Green
    Audit & Assurance Senior Manager
    Accounting & Reporting Advisory
    Deloitte & Touche LLP
    1 989 633 7241

       

    John Vickers
    Risk & Financial Advisory, Managing Director
    Deloitte & Touche LLP
    +1 713 982 2329

       

    John Heath
    Risk & Financial Advisory, Senior Manager
    Deloitte & Touche LLP
    +1 713 331 4576

    Mike Schor
    Risk & Financial Advisory, Partner
    Deloitte & Touche LLP
    +1 212 436 6208

         

    The services described herein are illustrative in nature and are intended to demonstrate our experience and capabilities in these areas; however, due to independence restrictions that may apply to audit clients (including affiliates) of Deloitte & Touche LLP, we may be unable to provide certain services based on individual facts and circumstances.

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