Audit Committee Leadership Network, August 2021
Environmental, social, and governance (ESG) reporting is now a priority for directors of the largest companies. It is a rapidly evolving issue, with yawning expectation gaps between private standard setters, issuers, regulators, and investors, prompting one audit chair to remark, “Management keeps telling me this is all about as clear as mud, so I have a hard time holding them to account on all this.”
An ever-expanding range of demands for information from companies has led to a proliferation of frameworks and standards, a complex landscape of reporting initiatives, and a forest of acronyms. Some companies are further along than others in identifying the ESG issues that are most salient to their businesses, managing the associated risks, and plotting a path through complex reporting options. “What is the prognosis for this becoming less of a mess?” one audit chair asked. Attempts at improvement are underway. Several organizations are now collaborating to align their initiatives with each other. The Securities and Exchange Commission (SEC) has also signaled a new position on ESG disclosures.
On June 28, 2021, members of the Audit Committee Leadership Network (ACLN) met virtually to discuss the state of ESG standards and sustainability reporting with Janine Guillot, CEO of the Value Reporting Foundation, and Eric Hespenheide, chair of the Global Reporting Initiative (GRI).