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Post: EY: Finance Leaders Turn to AI to Solve ESG Data Problems

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EY: Finance Leaders Turn to AI to Solve ESG Data Problems
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EY’s 2024 Global Corporate Reporting Survey reveals the industry-wide concerns of business leaders | Credit: EY An EY survey finds that whilst AI can address key shortcomings in non-financial data management, concerns remain around sustainability-related reports

Financial executives worldwide are raising serious concerns about the reliability of environmental reporting data, with new research revealing widespread scepticism about companies’ ability to meet their sustainability targets. The findings, released in EY ‘s 2024 Global Corporate Reporting Survey, paint a troubling picture of the current state of corporate sustainability reporting.

The survey, which gathered insights from more than 2,000 finance leaders and 815 institutional investors globally, found that a staggering 96% of CFOs have concerns about the integrity and reliability of their organisations’ non-financial data. This is nothing short of a crisis of confidence. What’s more, this insecurity comes at a crucial time when stakeholder scrutiny of environmental performance is intensifying. Youtube Placeholder Is pressure from investors growing?

EY’s report shows that more than two-thirds of finance leaders are being questioned more about non-financial metrics by investors , compared to two years ago. Now, this speaks to the growing importance of environmental, social and governance (ESG) data in investment decisions. However, the study reveals some significant challenges in data management, with 39% of respondents reporting problems with data formats and 35% citing inconsistencies.

Perhaps most concerning for sustainability professionals is that only 47% of finance leaders believe corporations are on track to achieve their stated environmental goals. This scepticism is slightly less pronounced among investors, with 53% expressing confidence in companies’ ability to meet their targets.

Reporting is now mandated and must also comply with stringent regulations Fears of greenwashing and the challenges of regulation

The spectre of greenwashing allegations looms large over corporate environmental reporting, with 55% of finance leaders expressing concern about potential accusations in their industries. This anxiety reflects deeper doubts about whether nonfinancial disclosures are supported by robust due diligence and data processes.

While new reporting standards offer some hope—with 78% of investors believing they could positively impact sustainability disclosures—finance leaders appear less optimistic. More than half anticipate burdensome costs, whilst 44% believe […]

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