New FERF Report Reveals Biggest Challenges Organization Face Regarding ESG Financial Reporting

Finance Professionals only just beginning to integrate ESG information into financial reporting practices

Morristown, N.J. – The Financial Education & Research Foundation (FERF)—the independent non-profit research affiliate of Financial Executives International (FEI)—today released the findings of its first Environmental, Social, and Governance (ESG) Report. The report, entitled Financial Statement Preparers and the ESG Journey: Charting Course reveals some of the biggest challenges organizations face with respect to ESG Financial Reporting.

Media Contacts:

Claudine Cornelis
Crimson Communicates
845.424.6342
claudine@crimsoncommunicates.com

Lili DeVita
FEI
973.765.1021
ldevita@financialexecutives.org

Specifically, the report examines the involvement of the finance team in the ESG reporting process, to what extent it is integrated with the financial reporting process, and the biggest challenges that ESG reporting presents to finance professionals so far. Analysis delves further, exploring the:

  • Types of information that should be disclosed
  • Internal program drivers
  • Impact that ESG financial reporting can/should have on the broader ESG strategy
  • Common ESG topics being monitored today

Financial statement preparers have been watching the evolution of ESG financial reporting for years, and while some have incorporated ESG topics into their financial reporting, many are navigating the complexities and are left with questions.  

The survey found that management reporting professionals are only beginning to integrate ESG information into their financial reporting practices, even though demand for high-quality information related to a company’s reporting on ESG has dramatically increased over the years. The reason:  hurdles currently exist including the significant number of disclosure frameworks, reporting methodologies, and stakeholder demands.

“Our members always seek to take a mindful approach to all financial leadership initiatives. Inarguably, they are hearing more calls for high quality levels of ESG integration into financial reporting. While there are still many questions surrounding exact guidance, our report is designed to help them understand what their peers are considering so they can incorporate this information into their own efforts. We see this report as a useful tool to help all financial professionals deliver high-quality financial reporting,” said Andrej Suskavcevic, CAE, President and CEO of Financial Executives International and Financial Education & Research Foundation.

Key Findings Include: 

  • Finance involvement in ESG still early-stage, with 53% of FEI members surveyed participating in broad “reporting oversight” of ESG.
  • More than half of all respondents (53%) indicated that they had not yet started to integrate ESG reporting with their financial reporting and 43% indicated that they had merely started to do so. 
  • Data is the biggest single challenge to ESG reporting, and questions related to collection, collation, analysis, and control are among the biggest ESG-related data questions.
  • 85% of companies are using multiple ESG reporting frameworks.
  • Finance professionals report difficulty with hearing through all the noise and providing relevant, concise ESG metrics in telling their organization’s ESG story.

Methodology and Sources
The Financial Education & Research Foundation developed the questions in the survey and those in qualitative interviews. This report and the findings are based on a survey distributed to public company members of FEI. In total, 53 chief accounting officers and controllers from some of the largest US companies (CK) completed the survey. In addition to the survey’s findings, representatives from 12 public companies, two investment professionals, and one academic participated in research interviews.

The full report can be viewed at https://www.financialexecutives.org/Research/Publications/2021/Bringing-the-ESG-Ecosystem-to-Life.aspx.

About Financial Education & Research Foundation, Inc. 
Financial Education & Research Foundation (FERF) is the non-profit 501(c)(3) research affiliate of Financial Executives International (FEI). FERF researchers identify key financial issues and develop impartial, timely research reports for FEI members and nonmembers alike, in a variety of publication formats. FERF relies primarily on voluntary tax-deductible contributions from corporations and individuals, and publications can be ordered by logging onto https://www.financialexecutives.org/Research.aspx

About FEI
Financial Executives International (FEI) is the leading advocate for the views of corporate financial management. Its members hold policy-making positions as chief financial officers, chief accounting officers, treasurers, and controllers at companies from every major industry. FEI enhances member professional development through peer networking, career management services, conferences, research, and publications. Members participate in the activities of more than 65 Chapters in the U.S. FEI is located in Morristown, NJ. Visit www.financialexecutives.org for more information.

Media Contacts:

Claudine Cornelis
Crimson Communicates
845.424.6342
claudine@crimsoncommunicates.com

Lili DeVita
FEI
973.765.1021
ldevita@financialexecutives.org