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Liz and Lawrence recently blogged that the climate change rules are still under consideration at the SEC, and final rules may be delayed until later this year. Companies often wait until a final rule is adopted before preparing for a new disclosure regime, but for many reasons, that didn’t seem wise with the climate change proposal (and the time to comply with PVP really confirmed that for me). With many recommending companies prepare early—including this blog—did they actually heed that advice?

This Deloitte survey seems to suggest that they did. Here is an excerpt from the forward with promising stats in terms of preparedness for the final rules, if adopted this year:

We released an ESG readiness report in March 2022, at which time 21% of executives indicated that their companies had established a cross-functional working group—made up of executives across finance, accounting, risk, legal, sustainability and other business leaders—to drive strategic attention to ESG for the business. A similar profile of respondents surveyed recently noted that progress in establishing a cross-functional working group has nearly tripled to 57%.

ESG readiness and external assurance remain valuable tools in preparation and can make a significant impact on a company’s governance and reporting processes and controls. Our recent findings show that nearly all (96%) executives plan to seek external assurance for the next reporting cycle, with 61% already seeking external assurance and 35% seeking external assurance for the first time. These findings indicate that more mature ESG programs typically have key components of an effective governance structure like ESG councils and assurance processes in place.

While companies are actively working to meet the growing need for high-quality ESG performance metrics, some challenges remain. When surveyed, 35% of executives reported that their greatest challenge is the accuracy and completeness of data, and another 25% cited access to quality data as the greatest challenge. To ameliorate this, 99% of companies are somewhat or very likely to invest in more technologies and tools over the next 12 months.

Those numbers on external assurance and new technology investments are impressive to me!  Keep in mind that 300 executives at publicly owned companies with a minimum annual revenue requirement of $500 million or more were surveyed in August and September 2022 for these stats. I’m sure the numbers would be very different with a different set of respondents. To that point, ISS recently released an article that concluded: “most corporates are unprepared to integrate complex climate-related considerations in their strategy and disclosures.” But still, the survey results may make an important point for any laggards out there—given these moves, there may be less empathy for those who procrastinate.

For anyone motivated by this data, PracticalESG.com members have access to resources that can help – from our exclusive Sample Climate Disclosure based on the SEC proposal, guidebook on E&S Data Validation to checklists on Starting a Climate Program, Verifying Air Emissions Information, Internal Controls for E&S Information and what you need to know about the CSRD. If you’re not already a PracticalESG.com member with access to these resources, sign up now and take advantage of our no-risk “100-Day Promise.” During the first 100 days as an activated member, you may cancel for any reason and receive a full refund.

– Meredith Ervine