Responses illuminate the level of preparation still needed by many enterprises to comply with the anticipated U.S. Securities and Exchange Commission ESG rules.
LOS ANGELES–(BUSINESS WIRE)–AuditBoard, the leading cloud-based platform transforming audit, risk, ESG, and compliance management, today announced the release of their 2023 ESG Maturity Benchmarking Report: Accelerating ESG Transformation. The report found that two-thirds of organizations have not implemented ESG controls, and that 60% do not currently perform internal ESG audits. This lack of ESG program readiness puts organizations at risk of incurring potential financial penalties due to non-compliance with future regulations, including the forthcoming ESG rules from the Securities and Exchange Commission (SEC).
The report, which is based on the results of a survey of more than 200 audit, risk, and compliance professionals involved in ESG management, also indicates that some organizations are more advanced than others in their ESG program readiness. For example, over 75% of respondents said they currently collect evidence for ESG metrics, and 26% reported that they plan to begin performing internal ESG audits in the next year. In addition, 61% reported having a dedicated ESG team or committee with representatives from audit, compliance, legal, and/or risk management.
Despite progress, readiness gaps remain at many companies. For instance, only one-third of respondents report being in compliance or planning to comply with the proposed SEC ESG rules. For those that do plan to comply, the report findings reveal that 90% currently fall within the bottom half of maturity levels for reports and disclosures. Resourcing is also a potential issue, as 46% of respondents reported that there is no dedicated budget allocated for ESG technology or headcount. Even among those with an ESG budget, only 9% have a budget allocated for ESG program management technology.
“The AuditBoard survey on ESG maturity reveals an urgent need to align investment with controls and transparent disclosure. As companies face looming ESG regulations across the globe, the integration of ESG principles cannot remain segmented,” said John A. Wheeler, former Gartner IRM Analyst and Senior Advisor, Risk and Technology at AuditBoard. “Integrated risk management (IRM) technology offers a pathway to unify these elements, ensuring that businesses are not just compliant, but are leading the way in sustainable practices. By marrying investment with robust controls and clear disclosure, companies can prepare for the regulatory landscape and position themselves as responsible stewards in the global market.”
Other key findings of the report include:
- ESG is not included as a strategic part of enterprise risk management at many organizations: 40% of organizations don’t include ESG risks in ERM strategy, and 35% of organizations have not performed a materiality assessment.
- Of four key areas of ESG competency (Investment and Processes; Breadth and Depth; Reporting and Disclosures; and Governance and Controls), survey respondents displayed the highest maturity in Investment and Processes and the lowest maturity in Reporting and Disclosures.
- The most tracked topics in each ESG category were: Climate change and carbon emissions (Environmental, 72%), Gender and diversity (Social, 75%), and Board composition (Governance, 66%).
To produce the 2023 ESG Maturity Benchmarking Report: Accelerating ESG Transformation, AuditBoard collected data from over 200 respondents to an online survey conducted in April–June 2023 located in the Americas, EMEA, and APAC. Over 82% of the respondents were from medium (1,000-10,000 employees) to large (over 10,000 employees) companies. 74% were at public companies. 56% of respondents held positions in internal audit, and nearly 20% held roles in ESG, sustainability, or corporate social responsibility functions. Sample titles of the respondents included: VP, Corporate Sustainability; SVP Internal Audit & ERM; Global Director, ESG; Director of Risk Management; and Sr. Manager, Financial Compliance.
Click here to see the full survey results in AuditBoard’s 2023 ESG Maturity Benchmarking Report: Accelerating ESG Transformation.
To learn more about AuditBoard’s ESG program management capabilities visit AuditBoard.com/ESG.
About AuditBoard
AuditBoard is the leading cloud-based platform transforming audit, risk, ESG, and compliance management. More than 40% of the Fortune 500 leverage AuditBoard to move their businesses forward with greater clarity and agility. AuditBoard is top-rated by customers on G2, Capterra, and Gartner Peer Insights, and was recently ranked for the fourth year in a row as one of the fastest-growing technology companies in North America by Deloitte. To learn more, visit AuditBoard.com.
Contacts
Mila Taylor
press@auditboard.com
