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NEW DELHI : Corporate reporting is changing fast from a traditional one to include environment, social and governance (ESG) issues but a disconnect exists between companies and investors on ESG reporting, EY said, quoting a survey of over 1,000 finance leaders, including 40 from India.
The survey showed that 80% of finance leaders surveyed in India and 74% globally felt the transition from traditional financial reporting to an enhanced corporate reporting model encompassing financials and ESG reporting has accelerated.
However, there is still scope for improvement, said the 2021 EY global corporate reporting survey.
In the post-pandemic world, it is important that the approach to communicating a company’s ESG performance should evolve quickly to earn the trust of stakeholders, the report said. Investors and other stakeholders are seeking consistent and credible ESG disclosures on the material issues that help them understand how a company performs, makes decisions and creates long-term value and sustainable growth, it said.
“But, to meet stakeholders’ expectations, ESG reporting should mature to have the same level of rigour and relevance as financial disclosures and to better demonstrate the economic impact of different ESG approaches. Without it, it will be difficult to really build trust in what is being disclosed," the report said quoting EY’s global financial accounting advisory services leader Tim Gordon.
“However, the research shows there are significant uncertainties over whether that is the case today, and that a disconnect exists between investors and companies on ESG reporting, the report said quoting Gordon.
The world faces significant challenges, from building post-Covid-19 pandemic prosperity to addressing major environmental threats. Enhanced corporate reporting can play a central role in helping organizations to navigate turbulence and help to build a sustainable future, the report said.
Sandip Khetan, national leader and partner, financial accounting advisory services at EY India said in a statement that chief financial officers (CFOs) and financial controllers need to continue to demonstrate their strategic role in reframing a new future for finance by building more agile and fluid operating models.
