ESG controllers boost firms’ confidence in their reporting.

Dedicated ESG staff can help decrease disclosure risk.
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There’s a new role coming to finance departments to help navigate climate disclosure risk. ESG controllers are a relatively new phenomenon, but having one can do a lot for a company’s confidence in and accuracy of its ESG reporting.

That’s according to a recent poll conducted by Deloitte during a Deloitte Center for Controllership webinar. Among respondents who worked for companies with ESG controllers, 75.5% told Deloitte they were confident in their organizations’ ESG reporting capabilities.

In contrast, only 45.7% of all respondents said they felt confident in their organizations’ ability to report on ESG metrics for compliance purposes. That poses a challenge for organizations, especially given the anticipated finalization of the new SEC climate disclosure rule this year.

Having confidence in a firm’s reporting is very important, Dina Trainor, a Deloitte Risk & Financial Advisory managing director, told CFO Brew, “because increased confidence levels decrease risk.” ESG controllers and finance teams often take a “risk and controls” approach to ESG data, she said, which can “potentially decrease disclosure risk to an organization.”

Historically, finance hasn’t played a large role in ESG, Trainor said. That’s changing.

The risk associated with making ESG data public, she said, has spurred many companies to hire or appoint a designated person or team who can “cross navigate across the organization to really, truly understand the data” and have “accountability for the data and the accuracy of the information.”

At some companies, that person is an ESG controller, and their numbers are growing. According to the Deloitte poll, 16.4% of organizations in the survey employ ESG controllers, and 7.2% have plans to hire one.

As ESG is still an emerging concern, ESG controllers will “probably became mainstream within maybe the last year or less,” Trainor said, as organizations come to grips with how new ESG regulations may affect them.

Having finance teams play a broader role in ESG can also increase organizations’ confidence in their ESG reporting, even when they don’t have someone in an ESG controller role. In the Deloitte poll, 53.4% of respondents said that their firms’ finance teams had at least some influence over ESG. That influence could take the form of attending board meetings, producing formal or ad hoc ESG reports, or making ESG-related recommendations to the C-suite. Of this group, 60.7% were confident in their firms’ ESG reporting abilities.

Firms with both ESG controllers and finance teams involved with ESG were, not surprisingly, the most optimistic about their ESG capabilities. A full 81% of this group said they felt confident about their abilities in the area.—CV

News built for finance pros

The latest news and insights corporate finance professionals need to know to keep up with their constantly evolving industry.