Why do CFOs struggle with sustainability reporting requirements?
The study said 60% are unsure about the resources required to meet new reporting obligations.
CFOs are facing challenges in complying with complex economic conditions whilst balancing multiple priorities, according to a study by Deloitte.
The company said three in ten organisations report that CFOs, along with chief sustainability officers (CSO), are responsible for navigating sustainability reporting requirements and driving business value through effective sustainability practices,
However, Josette Soh, sustainability & climate assurance partner at Deloitte Singapore, noted that the mandatory sustainability reporting requirements vary significantly across different geographies, particularly in Southeast Asia.
These requirements place significant obligations on businesses, often introducing challenging expectations on a relatively new topic, leading many organisations to feel unprepared to meet the increased standards or confident in their capabilities.
Deloitte’s study found that 60% of organisations are unsure about the resources required to meet new sustainability reporting obligations.
Companies that have assessed their needs expect their resource demands to double. This uncertainty is exacerbated by key skill gaps in data management, finance, and sustainability, as well as a general lack of familiarity with sustainability issues across the organisation.
Will Symons, Deloitte Asia Pacific’s sustainability leader, noted the challenge for CFOs to integrate sustainability reporting into business value creation. He suggested that CFOs should focus on leveraging both internal capabilities and external leading practices to develop a strategic plan that not only achieves compliance but also embeds sustainability reporting into the organisation’s decision-making processes over time.
A separate Deloitte study found that over 45% of organisations have identified gaps in their reporting capabilities, with data often disjointed across geographies and lacking the quality and controls needed to meet assurance standards.
Key capabilities required for effective sustainability reporting include data acquisition, consolidation, and automation. Rather than investing in entirely new systems, many organisations are opting to enhance their existing systems, making targeted investments to close capability gaps.
The report also highlights the potential for long-term value creation through sustainability reporting. About 35% of organisations are already seeing increased revenue from sustainability initiatives, while another 35% report business innovation.
Sustainability reporting can enhance employee engagement and attract top talent, as organisations with a strong focus on "people and planet" are more likely to be seen as industry leaders, Deloitte said.
In the near term, Deloitte said achieving assurance-ready sustainability reporting offers clear benefits, including mitigating regulatory risks, enhancing reputation, and building business resilience. The data gathered through these processes can be leveraged to drive significant business value and reinforce stakeholder trust, it added.