Workiva Survey Reveals ESG Reporting Challenges as Regulations Intensify

Companies across the globe are facing mounting challenges in delivering accurate, auditable environmental, social and governance (ESG) disclosures as new reporting regulations take hold, according to a major new survey from Workiva. The 2024 Global ESG Practitioner Survey collected insights from over 2,000 professionals working in ESG, finance, accounting, sustainability, internal audit, risk management and operational roles at companies in North America, Europe, the UK and Asia Pacific.

The findings lay bare the significant compliance hurdles and data quality issues undermining ESG reporting efforts amid intensifying rules and standards like the European Union's Corporate Sustainability Reporting Directive (CSRD). Key findings point to the significant compliance hurdles and data challenges undermining efforts to deliver accurate, integrated ESG disclosures:

Regulatory Strain: One of the top pressure points identified is adapting reporting processes to comply with the raft of new ESG disclosure requirements. A striking 87% of respondents said they find it challenging to conform processes to new regulations. This highlights the complexity and resource strain as companies must enhance systems, controls and cross-functional collaboration to collect reliable ESG metrics across environmental, workforce, human rights and governance domains.

Data Doubts: While the vast majority (98%) of ESG practitioners expressed confidence in the accuracy of their current ESG data, an alarming 83% also agreed that collecting data with sufficient precision to fulfill stringent new standards like CSRD will be a major challenge. The findings point to a glaring disconnect between perceived data quality today and the enhanced rigor required, with legacy systems and siloed processes unable to deliver auditable ESG information at the scale needed.

Assurance Importance: Underscoring this data quality imperative, 88% of those surveyed believe some level of independent assurance over ESG disclosures increases the likelihood a company will make meaningful progress against its sustainability targets and commitments. As investor scrutiny over ESG performance heightens, verified data is rapidly becoming a must-have for companies to demonstrate accountability and build trust with stakeholders.

Integrated Shift: Reflecting this new paradigm, the survey found 81% of companies not currently subject to CSRD or other major ESG disclosure rules still intend to publish an integrated report combining financial and non-financial environmental and social metrics. This points to integrated reporting fast becoming the new norm as businesses recognize the need for cohesive data and storytelling around their total corporate impacts and value creation.

Technology Investment: To tackle these mounting ESG pressures, 92% of respondents said their company is investing in new technology platforms and solutions to streamline reporting processes through enhanced data collection, controls and cross-functional collaboration. Cloud-based solutions that connect ESG data flows across enterprise silos are emerging as critical enablers for delivering the trusted, auditable disclosures that investors, regulators and other stakeholders now demand.

The Workiva survey findings lay bare the substantive challenges facing corporate ESG reporting amid a global shift toward crystalizing sustainability risks and impacts into rigorous, verified disclosures on par with financial reporting. With penalties for misstatement looming, data quality and controls have become an existential priority for developing the trustworthy ESG narratives that stakeholders are seeking. The findings highlight the urgency for businesses to modernize systems and controls to deliver reliable, auditable ESG metrics amid heightened regulatory scrutiny and investor focus on sustainability performance.

The full survey, developed with sustainability pioneers CDP and NYU Stern, is available for download on Workiva's website.

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