ESG (Environmental, Social, and Governance)
Why ESG (Environmental, Social, and Governance) has suddenly become a top priority for CFOs. The broader context? A world increasingly concerned with sustainability and corporate responsibility.
Every year, Protiviti surveys CFOs and financial leaders worldwide about their top priorities. This year, ESG reporting made its debut at the top of the list. ESG reporting is a new way to assess how well companies are meeting sustainability and corporate responsibility standards. With new EU and SEC regulations coming into effect, ESG reporting is no longer optional but mandatory.
But why has ESG become such a high priority? The answer is simple: intensity. CFOs are the gatekeepers of data. When there’s a box full of numbers, it’s their responsibility to ensure the numbers are accurate, consistent, and timely. Now that box includes ESG data as well.
CFOs are now responsible for handling ESG reports that are sent out not just to shareholders, but also to lenders, vendors, customers, employees, community groups, and insurers. In other words, all stakeholders. And it’s not just for compliance. It’s a response to an increasing demand from all corners of the business ecosystem.
So, what are CFOs doing about ESG reporting right now? They are investing time in understanding the new regulations, how they affect their companies, and how to adapt to the new requirements. For example, European-based companies are trying to understand the CSRD regulations, while US private firms are focusing on their readiness to go public and comply with these new rules.
Perhaps what’s most interesting is that the process of ESG reporting is still maturing. With different standards, industry focuses, and geographical needs, the process will continue to evolve. By the time it is fully matured, ESG might not even be a term we use anymore. It will simply be seen as ‘doing business.’
Will ESG reporting continue to be the highest priority for CFOs? Likely, it will become BAU (business as usual), embedded in the daily operations and work of companies. And that’s when you know ESG has truly made its mark.
