A new survey has found that finance leaders are struggling to deal with concerns over the reliability and integrity of their organizations’ non-financial data in corporate reporting. The survey, which was carried out by EY, found that 96% of finance chiefs were worried that their non-financial data wasn’t fit to support decision making. Their main issues with the data included inconsistencies and data formats.
Half of the finance chiefs surveyed also revealed their concerns that organizations would miss important sustainability targets soon, with only 53% and 47% of investors and finance chiefs respectively, believing that organizations were on course to achieving their objectives.
Additionally, only 69% of finance chiefs admitted to noticing more inquiries from investors about non-financial value drivers, in comparison to 2 years ago.
EY Global & Americas Strategy and Markets Leader Myles Corson explained that guiding organizations though volatility in the short-term while still controlling long-term growth relied on the effective use of data by finance to demonstrate prospects and future plans. Corson added that it was clear that CFOs and the investor community at large were worried about non-financial data and transparency, which couldn’t be ignored.
Despite the worry, investors are hopeful that new standards of reporting will boost sustainability disclosures, with 78% of them holding the opinion that the new rules could have a positive impact.
44% of finance chiefs believe that adhering to the new regulations will be complicated, while another 55% expect the costs to be onerous. In particular, 39% of finance leaders are concerned abut costs while another 36% have concerns about compliance with rules and regulations related to artificial intelligence.
Even with these concerns, 43% of finance chiefs are enthusiastic about the use of artificial intelligence in corporate reporting. Additionally, 32% of finance chiefs admitted to having already set up advanced tech for the analysis and management of data.
EY Global Financial Accounting Advisory Services Leader, Nicolas Lecoq, explains that the financial chiefs’ worry around organizations’ ability to meet important objectives emphasizes the increasing importance of bolstering confidence in sustainability reporting.
With more shareholders, consumers, investors and regulators holding firms accountable for their commitment to sustainable practices and environmental impact, the integrity of corporate reporting is now more important than ever. Lecoq notes that corporate reporting reflects the dedication an organization has to its sustainability objectives and can directly influence the wider public, and investors are willing to have a say in it.
Companies like Aston Bay Holdings Ltd. (TSX.V: BAY) (OTCQB: ATBHF) in the extractives industry also probably have their own challenges in collecting and leveraging ESG data. The solutions that emerge over time could help to fix these dilemmas.
NOTE TO INVESTORS: The latest news and updates relating to Aston Bay Holdings Ltd. (TSX.V: BAY) (OTCQB: ATBHF) are available in the company’s newsroom at https://ibn.fm/ATBHF
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