Malaysia

Ernst & Young: Instil discipline in non-financial reporting processes

KUALA LUMPUR, Aug 3 — While environmental, social and governance (ESG) disclosures are gaining significance, organisations need to instil discipline into their non-financial reporting processes, tapping on the extensive experience of the finance and risk teams.

According to Ernst & Young (EY) Global Ltd’s fifth “Climate Change and Sustainability Services (CCaSS)” survey, there was significant appetite among investors for an independent lens on ESG performance, as 75 per cent of the respondents said they would find value in assurance of the robustness of an organisation’s planning for climate risks.

“Investors also see a strong need to build confidence and trust in green investment disclosures, with 82 per cent saying it would be useful to have independent assurance of the impact of green investments,” EY Global CCaSS leader Mathew Nelson said in a statement today.

However, he noted that the ESG performance reporting generally lacked the rigorous systems and controls that characterise financial reporting.

“As a result, investors and corporates cannot guarantee the accuracy and reliability of non-financial reporting.

“Establishing effective governance practices and assurance of non-financial processes will help build trust and transparency,” he said.

Nelson noted that overall, the findings show that addressing urgent environmental and climate change threats had become more important than ever in the eyes of investors.

“Although many organisations are in crisis-response mode as a result of the Covid-19 pandemic, those with strong sustainability functions that focus on what is most material to their long-term success will be more likely to rebound once the crisis is over and deliver long-term value,” he added. — Bernama

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