A new report from The Conference Board, a US-based think tank, sheds light on the growing complexity of ESG and sustainability disclosure regulations, highlighting both operational challenges and opportunities for companies. As national and international standards evolve, organisations face increased compliance risks, higher operational costs, and added burdens on reporting staff.
The report, ‘Cutting Through Complexity: Managing International ESG Disclosure’, produced in collaboration with Weil, Gotshal & Manges LLP, emphasises that navigating this regulatory landscape requires a multi-layered governance structure and effective internal coordination.
“International ESG disclosure will continue gaining momentum—and many companies are not fully prepared to successfully navigate its unique complexities. Effective reporting and compliance require a multi-layered governance structure, entailing internal groups that are accountable to each other and coordinate across the company,” said Anuj Saush, coauthor of the report and Leader of The Conference Board EU ESG Center.
The report highlights challenges in three areas -rapidly evolving regulations and a variety of reporting frameworks or initiatives; internal and external alignment; and complex data and resource management.
The rapid pace of change in ESG regulations and the variety of reporting frameworks lead to inconsistencies and increased workloads.
“Companies that proactively track evolving regulations will be better positioned to adapt and comply. To meet future requirements, firms must identify the necessary team skills and capabilities, and allocate the right resources to manage compliance effectively. Assessing global trends, business requirements, and best practices will also help consolidate information, track the status of disclosures, and identify implementation gaps,” said Rebecca Grapsas, Partner and co-leader of the ESG & Sustainability practice at Weil, Gotshal & Manges LLP.
Effective ESG reporting requires cross-functional data integration and alignment with external stakeholders, including suppliers. Bridging the ESG knowledge gap across departments and ensuring accurate supply chain disclosures are crucial for meeting new reporting standards like the EU’s CSRD and CSDDD.
“To achieve internal and external alignment on sustainability reporting, bridging the ESG knowledge gap is essential. Stakeholders hold diverse viewpoints on ESG definitions, practices, regulations, and reporting. Companies must proactively foster ESG knowledge and proficiency across all organisational levels to establish a common language and terminology to avoid potential confusion,” said Merel Spierings, coauthor of the report and Senior Researcher at The Conference Board ESG Center.
Managing extensive data for ESG reporting involves addressing data quality, availability, and accuracy. Companies must build robust data management systems to handle new disclosure requirements and ensure reliable reporting.
These insights come from a meeting held under the Chatham House Rule with approximately 100 executives in the governance, legal, and sustainability areas.