By: Marc Siegel, EY Americas Corporate and ESG Reporting Leader

Just as homes built decades ago were not plumbed for today’s appliances and lifestyle requirements, most companies now need to update their corporate reporting plumbing and processes to support today’s environmental, social and governance (ESG) data gathering and reporting needs. As a practical matter, the lack of plumbing to support ESG corporate reporting contributes to a significant disconnect between the ESG disclosures investors desire and the information companies report. The technological systems most companies built, generally to support financial reporting, were established based on requirements created decades before. As with a home, updating the technological plumbing is costly. It also needs to be done with a strategic focus and an eye toward compliance. With the implementation of the Sarbanes-Oxley Act 20 years ago, companies modified their finance systems to comply with the standard, but the ESG focus of today was not yet a glimmer in anyone’s eye. As a prominent professor of business administration wrote: “Until the mid-2010s, few investors paid attention to environmental, social and governance (ESG) data — information about companies’ carbon footprints, labor policies, board makeup and so forth.”[1] Read More