KPMG: Most companies still lack readiness for ESG data assurance
There is a widening gap between ESG leaders and beginners.
A recent KPMG study highlights that most companies are still not prepared for ESG data assurance, with only 29% possessing the necessary policies, skills, and systems. According to Pamela Fan, Partner for ESG at KPMG in Singapore, this disparity is not so much a struggle but rather a reflection of companies being at different stages in their ESG journey.
“In terms of the ESG reporting, some companies obviously started preparing for the demands of all this reporting many years ago,” Fan noted, emphasising that jurisdictions like those in Europe began their ESG reporting journey over 20 years ago, whereas Singapore mandated ESG reporting for listed companies only in 2016.
Fan elaborated that part of advancing along the ESG assurance pathway involves “uplifting the skill sets of the current pool to the leaders such that they know what they're reporting on.” She sees the situation not as a challenge but as “patching up what is time lost in terms of the whole reporting.”
When it comes to adapting supplier requirements due to ESG demands, particularly Scope 3 emissions reporting, Fan acknowledged the struggle companies face with obtaining reliable data sets. “This is where really the whole economy and the whole of ecosystems comes together,” she said, pointing out the collaborative efforts of banks, regulators, and other parties in Singapore to align Scope 3 data with existing sustainability reporting standards.
Fan recognized that while there is still much work to be done and a reliance on estimation, she is confident that the entire ecosystem will eventually succeed in meeting these data challenges.
Beyond mere regulatory compliance, achieving ESG assurance readiness is increasingly seen as vital for business operations in certain regions. Fan emphasised that ESG reporting and assurance serve as a “licence to operate” in jurisdictions like Europe, where the Corporate Sustainability Reporting Directive (CSRD) will take effect as soon as 2025.
Fan offered advice for companies aiming to improve their ESG readiness, suggesting a comprehensive approach to understanding sustainability across the organisation. “You should start just learning about the whole topic itself,” she recommended, advocating for a “top down, bottom up approach” to grasp how sustainability impacts the organisation.
She stressed that this holistic understanding will lead to better appreciation and reporting of ESG issues, especially concerning carbon emissions. “It's really to understand what we are in order to report better information out there,” Fan concluded.
