Amid tightening regulations and rising stakeholder expectations, ESG verification and assurance are increasingly crucial for ensuring transparency, credibility, and trust in ESG reporting. This process involves independent third-party validation of an organization's ESG metrics and objectives, enhancing the reliability of key disclosures on material and performance indicators.
Despite numerous external and internal benefits — including compliance, improved reputation, lower capital costs, better practices, risk mitigation, and consistency — many enterprises remain hesitant to adopt ESG verification due to its costs and time commitments. This reluctance persists even as regulatory changes mandate comprehensive ESG reporting.
A recent KPMG study indicates that the ESG reporting landscape is rapidly evolving, with the percentage of firms reporting ESG data expected to rise from 66% in 2023 to 75% in 2024. However, challenges remain, particularly for newcomers. About 65% of new participants find it difficult to balance ESG objectives with shareholder profit expectations, up from 55% in 2023.
It further highlights the current state of ESG readiness among companies, revealing that nearly one-third feel prepared for independent ESG data assurance, a figure unchanged over the past nine months. A significant step during ESG reporting. Companies with clear audit trails for non-financial data have seen a slight increase from 26% in 2023 to 29% in 2024.
However, the low number of companies ready for ESG data verification remains a concern, as the Assurance Maturity Index indicates a growing gap between companies excelling in ESG assurance and those lagging behind. This slow progress is concerning given the approaching regulatory deadlines.
For further insights into KPMG's findings and the importance of ESG verification, please refer to the provided link.
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