The dust of the first annual report according to ESEF is about to lift. Time to look back and look forward. For how many organizations still saw ESEF as a supplement, ESG is of a completely different order. According to the speakers from the Workiva seminar ‘Reframing the Annual Report’, it is not an option to wait.
ESEF is primarily a supplementary law for reporting prepared in accordance with IFRS. ‘Still, ESEF shows that digital reporting is not that easy,’ says Willem Geijtenbeek, Digital Reporting Leader at PwC. ‘ESEF tagging revealed which companies have or do not have their reporting processes in order.’ Ayan Patel, Senior Manager of Capital Markets and Accounting Advisory Services at PwC, adds: “In companies where this was not the case, there was often urgent last-minute work.”
Market research conducted by Workiva also shows that no less than 84% of respondents were satisfied with their ESEF output. This research also shows that, on average, fifty people work on more than two hundred documents. Andromeda Wood, Workiva’s Vice President of Regulatory Strategy, comments: “Incidentally, the number of documents is not the issue. But the amount of emails and PDF comments to confirm data. And ESG increases the amount of content even more. We must control that process. ‘ And technology should help that process.
Also read: ESEF offers compliance teams the opportunity to improve reporting processes
For the mandatory sustainability reporting from 2023, the annual report must be revised. What does not help is that the rules are still not final. How do you prepare as an organization? Marisa Oosthuizen, TomTom’s external financial reporting manager, says: ‘Data must come from across the organization. That is why we have set up a task force with people from different tribes, such as law, HR and of course economics. And effective collaboration goes hand in hand with processes and controls that we adapt to this. ‘
It takes time. Therefore, it is crucial to start on time. Like knowing for what purpose you need to collect what data and what data sources are suitable. Mark Tesselaar, Senior Director ESG & IT at PwC, gives an example: ‘How do you determine CO2your company’s emissions? You can already embed this in processes and capture this in KPIs. Also ask stakeholders what topics they find important, because it differs from industry to ‘.
Perhaps the biggest problem for ESG implementation is staffing capacity. Already 69 percent of respondents perceive the workload as a major problem.
‘Sustainability increases the value of your business’
Companies are also already reporting on sustainability risks and issues such as working conditions and diversity. “What’s left is that history and data need to be consistent,” Geijtenbeek says. Tesselaar adds: ‘We have been helping customers with sustainability for years because it creates value for the organization and helps society.’
The annual report therefore does not stand alone. The story is also translated, for example, into policies, procedures and communication on the website. Nevertheless, regulation seems to be the biggest driver for companies to get started with ESG. Investors are also increasing the pressure. “They look at companies that make a difference,” Tesselaar says.
IT for future-proof reporting
Technology offers a solution to most challenges. But first, the basis for the reporting must be in order, says Memy Wong, Regional Sales Director at Workiva: “It is not just about the annual report. By streamlining the foundation within one platform, you can reuse data and meet all information requests and reporting standards. GAAP, IFRS and soon ESG. ‘
Wong continues: ‘Many companies still collect data in Excel and check it manually. You will save a lot of time if you can delete such repeated actions. ‘ Streamlining also reduces the risk of knowledge drains due to staff turnover. And to achieve ‘reasonable assurance’ of the ESG from the auditor, data reliability and collection processes are even necessary.
‘You save a lot of time if you can delete repetitive actions’
Patel: “Do not forget that different business entities will report on ESG. This means that many more people are involved. So you need to be able to collaborate digitally. ‘ TomTom is therefore partnering with Wdesk of Workiva, which offers a solution for all these needs. “And because the platform is scalable, it grows with the customer,” says Wong.
Start securing the future now
With the right technology and reliable data, you can generate any desired output. The implementation of ESEF was a test street for digital reporting. The principles remain the same, but the scope of the ESG is much greater. One concern for the panel is the lack of urgency in business. In the Workiva survey, only 22% of respondents identified ESG as a priority. TomTom therefore seems to be an exception with the early start.
The panel’s advice is therefore: start with what you now have and know. It is already a lot and an excellent starting point for ESG. If the reporting organization and the ultimate responsibility, data collection, processes and systems are in order, then you as an organization are agile and ready for the future!
This article is sponsored by Workiva.