Responsibility, expectation, and action: FSI sustainability progress
Financial services organizations play a significant role in progressing sustainability initiatives. Not only do they account for their own operations, but they also provide capital to other companies that can be used to advance their sustainability initiatives through financing, facilitating transactions, and insurance activities.<br><br> According to financial services executives responding to the survey, the most pressure for transparency and progress in ESG reporting and disclosure policy comes from many different angles, including the board of directors (53%); ESG rating agencies (49%); and customers, consumers, and clients (38%). High expectations from these different stakeholders, as well as evolving reporting obligations, have resulted in many financial services organizations closely monitoring the progress made toward their sustainability objectives, as well as the reporting obligations surrounding them.<br><br>Deloitte conducted a survey of 250 FSI executives about the status of their sustainability journeys. Among these participants were a mix of public and private companies representing a variety sectors, including banking and capital markets, insurance, investment management, and real estate. Among FSI respondents were sectors representing banking and capital markets, insurance, investment management, and real estate. Here’s what we learned about the FSI approach to ESG disclosures.
ESG report insights
How can you get on board with other ESG-focused FSI leaders?
The successful implementation of ESG-related reporting typically begins with a well-devised plan and includes a thorough understanding of your organization's ESG reporting circumstances as well as the new requirements that might affect them. Through that thorough understanding, this preparation should also address any existing gaps.
According to this year's report, financial services organizations are making strides toward achieving their sustainability objectives. However, some FSI organizations report taking a “wait and see” approach, signaling room for progress that may necessitate a more proactive approach.
Figure 7. The ESG readiness journey
The message here is clear: Don't delay in getting prepared. Despite pending developments, the Securities and Exchange Commission (SEC) ruling on March 6, 20241, along with the standards applicable globally through the Corporate Sustainability Reporting Directive (CSRD) and those in California, could dramatically expand the scope and detail of what you're required to disclose. If your organization has been readying itself for broader ESG regulatory requirements, the good news is you're likely not starting from zero. The groundwork you've laid for ESG can be applied in a comprehensive manner to meet disclosure requirements, thereby fostering efficiency and allowing you to effectively manage risk.
Regardless of your specific goals or where you currently stand on your sustainability journey, our sustainability and transformation team is here to advise you as you work to speed up your progress toward integration maturity and disclosure readiness. To understand if your current financial reporting processes are in line with your ESG objectives, reach out to one of our experienced advisers.
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For both public and private companies, ESG readiness is a unique and fast-evolving journey. Our ESG SelfAssess™ tool is here to advise you as you navigate yours. Explore how to open the door for a more defined and enhanced reporting process.
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Methodology
The Deloitte ESG Survey was conducted by Wakefield Research (www.wakefieldresearch.com) among 300 Executives at publicly owned companies with a minimum annual revenue requirement of $500 million or more. Executives are defined as Senior Finance, Accounting, Sustainability, and Legal Executives with a minimum seniority of director, or Chief Risk Officers, General Counsels, Chief Legal Officers or Chief Sustainability Officer. Oversample interviews were conducted to increase the total sample size to 250 public and private companies in each of the following industries: Life Science and Healthcare; Financial Services; Consumer Products; Technology, Media & Telecommunications; Energy & Utilities. The survey was fielded between January 4th and January 18th, 2024, using an email invitation and an online survey.
Data rounding
Percentages throughout survey may not sum to 100% due to rounding.
Endnote
1 On April 4, 2024, the SEC voluntarily stayed the effective date of the final rule pending judicial review of petitions challenging it, which have been consolidated for review by the US District Court of Appeals for the Eighth Circuit. The SEC stated that it “will continue vigorously defending the [climate rule's] validity in court” but issued the stay to “facilitate the orderly judicial resolution of” challenges presented against the climate rule and to avoid “potential regulatory uncertainty if registrants were to become subject to the [climate rule's] requirements” before the legal challenges were settled. The stay does not reverse or change any of the final rule's requirements nor does it affect the SEC's existing 2010 interpretive release on climate change disclosures. For additional details, read Deloitte's “Comprehensive Analysis of the SEC's Landmark Climate Disclosure Rule.”
iAmanda K. Beggs, Promoting human rights and environmental sustainability: Integrating ethics into the supply chain,” National Law Review, March 26, 2024.
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