CFOs Now Responsible for ESG Data Management and Reporting

As global requirements for sustainability disclosure and reporting increase, CFOs and finance leaders are stepping up to manage ESG data and reporting. In a recent survey by Protiviti, over 900 CFOs and finance leaders affirmed their responsibility for addressing the mounting demands for ESG data, metrics, and documentation. With nearly 70% of finance organizations reporting a significant increase in focus on ESG issues, measuring and reporting on ESG risks and issues is now considered a crucial part of their roles.

However, as the landscape of ESG reporting evolves from a “Wild West” phase to a more standardized and auditable era, finance leaders are facing new challenges. Ensuring that ESG data and reporting capabilities are trusted, consistent, and repeatable requires internal controls, data management, risk management, and cross-functional collaboration. This effort is particularly urgent for companies subject to the EU’s Corporate Sustainability Reporting Directive (CSRD) compliance requirements.

The shift towards more reliable and centralized ESG data collection is crucial. Unlike financial reporting, which relies on cleansed data from trusted sources, ESG reporting often involves unreliable data from disparate sources. CFOs are urged to establish a central repository for ESG-related data—a so-called “ESG ledger”—to ensure data integrity and increase confidence in reporting.

CFOs are also advised to leverage existing disciplines and collaborations within their organizations. Similar to financial reporting, ESG reporting requires input from various teams, including data management, legal, compliance, and information technology. By integrating ESG reporting into enterprise risk management (ERM) and seeking operational improvements based on ESG data, CFOs can further enhance their organization’s ESG reporting capabilities.

Building an ESG reporting capability that meets auditability standards takes time, but with thousands of global companies already subject to CSRD and new SEC climate disclosure requirements expected, CFOs must act now. While challenges and ambiguities may arise, CFOs are uniquely positioned to lead their organizations through these changes, leveraging existing disciplines and driving greater corporate-wide rigor in ESG reporting.