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Some of Australia's largest organisations, including Deloitte Australia and PwC Australia, are supporting the introduction of mandatory digital ESG reporting due to evolving sustainability regulations. This development comes in the wake of a corporate reporting event hosted by Workiva in Sydney, which featured representatives from Challenger, Yancoal, and UNSW, among others. The event highlighted the challenges these organisations face in complying with Australia's frequently changing ESG regulatory landscape.
The consensus at the event was that nationwide digital reporting would benefit companies by providing a standardised reporting framework. This system would result in more straightforward and error-free reports, which would be easier for the Australian Securities and Investments Commission (ASIC) to assess. Additionally, there was discussion on how ESG reporting could complement financial reporting by merging scientific data with financial data, allowing companies to better represent their value and streamline their workloads.
According to Workiva's 2024 research, 90% of the 140 ESG practitioners surveyed in Australia find it challenging to adapt their reporting processes to new regulations. Moreover, 87% of companies are prioritising ESG reporting more than in previous years, while 78% are concerned about their ability to collect and share information within their supply chains. Andromeda Wood, VP of Regulatory Strategy at Workiva, indicated that Australia might adopt standards similar to those in Europe, suggesting that companies already complying with European requirements would have a competitive edge.
The proposed climate-related financial disclosure legislation in Australia aims to align with these new regulatory standards, as indicated by the draft Australian Sustainability Reporting Standards based on those drafted by the International Sustainability Standards Board (ISSB). Christopher Brown, Partner in Accounting & Reporting at Deloitte Australia, emphasised the need for finance teams to support sustainability teams in understanding these new requirements and integrating digital ESG reporting into their processes. He stated that implementing digital reporting is crucial for Australia to stay competitive with trading partners who have already adopted such practices.
Findings from the Workiva survey also revealed that 87% of companies plan to allocate more budget to technology for ESG initiatives over the next three years, and 85% believe that access to technology and data is crucial for advancing their sustainability strategies. Furthermore, 90% of ESG practitioners indicated that their organisations are preparing for new regulations by undertaking digital transformation projects. Notably, 86% agreed that generative AI would enhance the efficiency of ESG reporting over the next five years.
Joanne Gorton, Managing Partner of Audit and Assurance at Deloitte Australia, reiterated the necessity for Australia to transition to digital reporting to remain competitive globally. Meanwhile, Carolyn Cosgrove, Partner in Sustainability Reporting & Assurance at PwC Australia, highlighted the risks of unintentional greenwashing. She warned that organisations not adopting digital ESG reporting could expose their directors to significant liabilities. According to Cosgrove, digital reporting could mitigate these risks by providing a standardised framework that reduces errors and ensures the correct measurement methodologies are used.
Cosgrove further noted the increasing challenges of sustainability reporting and the expanded liabilities for company directors. She stressed the importance of leveraging existing finance skills, establishing accountability, and adopting technology solutions to deliver accurate and timely reporting. Each company must navigate its unique path towards enhancing its finance function to meet these regulatory challenges effectively.
