Sales of software solutions that help companies track and report on ESG is expected to soar this year as numerous reporting regulations come into effect, Deloitte revealed.
ESG reporting regulations, such as the Sustainable Finance Disclosure Regulation (SFDR) and the Taskforce on Nature-related Financial Disclosures (TNFD), are increasing the amount of disclosure so companies can boost transparency and provide a clearer picture to clients.
Deloitte figures suggest sales of programs assisting firms with these regulations will surpass $1bn (£790bn) this year, while a Deutsche Bank survey estimated by 2024 half of managed global investment asserts will have ESG metrics reported on.
ESG reporting will require firms to improve their company data, HR data to report on DEI progress, while artificial intelligence (AI) has become an increasingly popular tool to calculate social and environmental impacts.
Vice president for regulatory strategy at Workiva, Andie Wood, commented: “A huge factor which is likely to be causing this projection of sales is the speed at which organisations are being asked to evolve when it comes to reporting. Shareholders in particular are demanding transparency and assurance that they can trust the data and insights provided to them. Needless to say, these expectations aren’t being “rolled out” gradually, as with regulations—they are already in full swing.
“All large companies should be transitioning to software that brings assured, integrated reporting as soon as possible. In business, technology is often referred to as ‘an enabler’, however companies will soon discover that sustainability reporting is a field where good technology is an essential. Sustainability will always need expert teams but in a field where expertise is in short supply, most companies will find they need something more.”
