Workiva survey reveals 88% of institutional investors are more likely to invest in companies that integrate financial and ESG data
Workiva Inc., the company powering transparent reporting for a better world, applauds the climate disclosure rules introduced by the U.S. Securities and Exchange Commission (SEC) on March 6, 2024. These new rules enhance and standardize the disclosure of climate-related data and associated financial risks, with the goal of providing investors with consistent, comparable, and reliable data in annual reports and registration statements.
“The climate disclosure rule elevates the significance of climate data in public filings to reflect its importance to investors in assessing company performance and evaluating risk,” said Julie Iskow, president and chief executive officer of Workiva. “Organizations will need to begin thinking about following a consistent disclosure process for financial and sustainability information, including assurance, on both numbers and narrative. This is what Workiva does. This is what assured integrated reporting is all about.”
Earlier this week, Workiva published insights from the 2024 Executive Benchmark on Integrated Reporting survey, which included perspectives from more than 800 executives and 100 institutional investors in North America. 92% of institutional investors surveyed acknowledge the importance of ESG data in evaluating long-term financial outlook and organizational risks, and 88% emphasize that ESG should be approached with the same rigor as financial reporting.
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The survey highlights a significant advantage for executives whose companies integrate financial and ESG reporting: they are nearly twice as confident in complying with the SEC climate disclosure rules as those who do not (68% versus 37%). Integrated reporting goes beyond regulatory compliance, with 91% of executives agreeing that it provides stakeholders with a comprehensive view of performance and value creation.
These findings underscore the crucial role of accurate business reporting and emphasize the need for companies to prioritize non-financial reporting to promote confidence and transparency for organizations and their stakeholders, regardless of regulatory mandates.
The SEC released a fact sheet outlining the new requirements, Below are the essential points to note from the SEC’s recent climate-related disclosure mandates:
- Scope 1 and 2 emissions, if material, with reasonable assurance for large accelerated filers and limited assurance for accelerated filers (with a phase-in period)
- An additional financial statement footnote disclosing the impact of climate-related events, mitigation efforts, and transition activities (subject to existing financial statement audit requirements)
- Disclosure of climate-related risks and their material impact on strategy and financial performance
- Quantitative and qualitative disclosures on activities undertaken to mitigate or adapt to climate-related risks (if these activities are undertaken)
- Inline XBRL™ tagging requirements
The new rule will pose challenges for sustainability and financial reporting teams. Consistency between reports will be heavily scrutinized, and many organizations have different reporting timelines for financial and sustainability reports. Addressing these requirements will require companies to adopt technology that can streamline processes, connect data and teams, and ensure data consistency, accuracy, and integrity.
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