It’s time to make ESG performance a priority has been saved
Perspectives
It’s time to make ESG performance a priority
Many regulators, investors—and customers—demand it.
Company disclosure of environmental, social, and governance (ESG) performance has become mandatory along with ESG metrics for many organizations, stakeholders, investors, and customers are taking notice, demonstrating how climate matters can impact financials—and intangible value. As the regulatory landscape rapidly evolves, those who are proactive may have a greater opportunity to benefit.
Global ESG rules and regulations underway
Given the global reach of certain regulations, companies across the board—public or private, domestic or international—will likely be subject to ESG disclosure. Let’s take a look at regulatory activity by region.
Building an effective ESG program
Most regulated entities in the United States and European Union may be facing fairly aggressive timelines to begin maturing their programs. To meet them, you should understand where your company stands today. To determine what progress may look like, identify which category, below, describes your company’s current state.
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01
Fundamental
In this beginning stage, you’ve likely yet to adopt a guidance framework, publish an ESG report, or complete a materiality assessment.
02
Efficient
Typically, you have governance and data collection in place, and your business has initiated a more efficient approach to ESG.
03
Strategic
At this point, your business starts to identify ESG controls and possesses the operational technology to support the process.
04
Groundbreaking
Generally, your established ESG program includes internal controls that are aligned with internal audit, risk, finance, and sustainability.
The journey to integrated ESG reporting
ESG reporting may seem fragmented and fraught with ambiguity today. But the regulatory landscape is evolving rapidly. We’re seeing consolidation among existing frameworks, with requirements being incorporated rather than retired. And although it’s still early days for ESG reporting, the teams and roles associated with sustainability are starting to become more consistent from one organization to the other. Teams often include people with audit, risk, and sustainability backgrounds.
Some still might ask: Is ESG worth the investment? It seems so. There is a clear trend that more regulation is coming, and it doesn’t appear that customer or investor demand is slowing down. Depending on where you are on your journey, remember that you’re not alone.
Contact us
Key contacts
 Evan Harvey |
 Judson Aiken |
Endnotes
1US Securities and Exchange (SEC), “Enhancement and standardization of climate-related disclosures: Final rules,” March 6, 2024.
2US Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA),“Federal acquisition regulation: Disclosure of greenhouse gas emissions and climate-related financial risk,” November 14, 2022.
3Science Based Targets initiative (SBTi) homepage, accessed November 2023.
4Large companies are defined as undertakings that meet at least two of the following criteria on their balance sheet dates:
1) greater than €25 million balance sheet total,
2) greater than €50 million net turnover, or
3) greater than 250 employees.
5UK Department for Business, Energy & Industrial Strategy, Mandatory climate-related financial disclosures by publicly quoted companies, large private companies and LLPs: Non-binding guidance, February 2022.
6Task Force on Climate-related Financial Disclosures (TCFD), About, accessed November 2023.
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