Environmental, social, and governance (ESG) is increasingly taking precedence for organisations across the globe. However, the majority of companies globally feel they are far from being ready to have their ESG data assured and meet new regulatory requirements.
In fact, less than a third (29 per cent) of companies feel they have the required ESG policies, skills and systems in place to be ready for independent ESG data assurance, despite rapidly approaching regulatory deadlines, according to new KPMG research.
This figure remains virtually unchanged from a previous KPMG study nine months ago (25 per cent). In the EU, reports are due to start appearing from the largest companies in early 2025, and this reporting wave will require independent assurance.
Larry Bradley, global head of audit at KPMG, said: “Getting ready for ESG assurance is a journey – and companies are finding that the further they get in that journey, the more there is to do and learn.
“The goal line is continually evolving. That is why progress may appear slow, even though many companies have truly been taking significant steps. This effort will pay off – Boards are increasing their focus on it and Leaders are reporting a growing range of benefits as the discipline involved in getting ready for ESG assurance permeates across systems, processes, controls and governance.”
The findings, presented in KPMG’s annual ESG Assurance Maturity Index, are based on responses from 1,000 senior executives and board members at organisations across industries, global regions and revenue sizes.
The higher a company’s revenue, the more likely it is to be advanced in its ESG assurance preparations, KPMG revealed. For companies with revenues of over $100billion, the score peaks at 69.5 (on a 0 to 100 scale), while for those with revenues under $5billion it is 39.3.
Minor progress made
KPMG also revealed that the benefits of becoming ready for ESG assurance include greater market share (56 per cent), decreased costs (48 per cent), and new business models (46 per cent).
Assessing companies’ progress in preparing for the demands of ESG reporting and assurance, the research classified organisations into ‘Leaders’ (29 per cent), ‘Advancers’ (46 per cent) and ‘Beginners’ (26 per cent) and calculates a maturity score.
Despite limited uplift in readiness, the research does show that some progress is being made. Not only has the percentage of companies in the Leader category grown, but the average score of those ‘Leaders’ has also increased, with a six per cent rise. The average score for the middle cohort of companies – ‘Advancers’ – has also risen, by three per cent.
However, there is a widening gap between these groups and beginners – where the average score has fallen by six per cent. The report warns that these companies are reaching the point where concerted action is needed.
Geographically, France tops the scores (52.4) as it did in 2023, while Germany has moved up strongly to second place (52.3) and Japan is third (50.2).
