A new report by KPMG reveals that while progress is being made, many companies are still lagging behind in preparing for mandatory ESG (environmental, social, and governance) reporting and assurance.

The study, based on responses from over 1,000 global companies, highlights the growing importance of ESG for businesses and investors.

Key findings

• Limited progress: Only 29% of companies feel confident about having their ESG data independently verified (assured), a slight increase from last year.
• Widening gap: The study identifies a growing gap between companies that are well-prepared ("Leaders") and those just starting out ("Beginners"). Leaders are showing large improvement, while Beginners are falling behind.
• Revenue matters: Larger companies tend to be more advanced in their ESG readiness, with scores correlating directly to revenue size.
• Benefits beyond compliance: Early movers are already reaping benefits like increased market share, reduced costs, and improved brand reputation.
• Assurance on the rise: The use of limited and reasonable assurance for ESG disclosures is increasing, but many companies still lack any external verification.
• Challenges and solutions: Finding skilled professionals is the biggest hurdle for companies. Many are planning to address this through external hiring.
• Supply chain focus: Leading companies are placing stricter ESG requirements on their suppliers, including data sharing and potential assurance.

The takeaway

With mandatory ESG reporting and assurance approaching fast, companies need to take action to improve their ESG readiness. This includes building internal expertise, working with suppliers, and implementing robust ESG practices. KPMG offers a five-step guide to getting ready for ESG assurance in their report.

Learn more about the report here.

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Source: KPMG