How the evolving ESG regulatory landscape is impacting finance

Their conversation focuses on the rapidly changing environmental, social and governance, or ESG, reporting landscape, and how the advancement of the regulatory agendas in the US and the EU are expected to have meaningful ramifications. Therefore, it’s critical that finance professionals stay current on emerging ESG topics to maintain relevancy and develop high-quality, enhanced reporting for key stakeholders.

Now that the Sustainability Accounting Standards Board (SASB) has fully merged with the IFRS Foundation, the SASB standards have become the intellectual property of the International Sustainability Standards Board (ISSB.) They plan to build upon those SASB standards, which, while not being mandated anywhere, have been widely adopted. Investors suggest that the SASB and Taskforce on Climate-Related Financial Disclosures, or TCFD, are probably the most useful frameworks they have found, and both are incorporated heavily into what the ISSB is leveraging.

To prepare for expected changes, companies should consider applying the skill sets and rigor of finance professionals to ESG data. According to a recent EY poll with the Corporate Controllership Leadership Network, around 75% of corporate controllers say they were very interested or already recruiting for an ESG controller, someone within the finance function to oversee the processes, controls and governance around ESG data.

To ensure our listeners are engaged with these topics, we are launching a new subseries within the Better Finance podcast series. This subseries will cover the movement of different regulatory and voluntary standard-setting processes, and how the investor community is engaging with and using ESG information.

Key takeaways:

• Evolving ESG reporting standards are pushing CFOs to stay relevant.
• Over 60% of the global S&P 1200 companies have voluntarily decided to adopt some or all of the SASB standards.
• The ISSB is hoping to be a foundational building block for an investor audience for globally consistent standards to be applied.
• However, with the Securities and Exchange Commission (SEC) putting forth a climate standard proposal, the risk of regulatory fragmentation globally is still significant. 

For your convenience, full text transcript of this podcast is also available. Read the transcript.