Australian finance teams confident on ESG rules but face skills gaps

Australian finance teams report a high level of preparedness for new Environmental, Social and Governance (ESG) reporting obligations, though significant challenges and skills gaps remain, according to new research by recruitment firm Robert Half.

The research indicates that since the introduction of new legislated mandates, which require businesses to disclose climate-related risks and opportunities under the AASB S2 sustainability reporting standard, finance functions have assumed a central role in ESG reporting processes. While finance departments are taking the lead in 45% of organisations, responsibilities are also shared with HR (35%) and legal and compliance (33%) departments. A further 26% of companies have created dedicated ESG teams, and 8% have an established Diversity, Equity and Inclusion team. Only 4% of employers are not conducting ESG reporting, and 1% attribute primary responsibility to another team.

Preparedness for new mandates

The survey, which included 196 finance hiring managers in Australia, found that 85% of finance teams say they are well or fully prepared for the new reporting requirements. Of these, 29% state that their systems and processes are fully ready, while 56% are well on track but acknowledge some areas still require finalisation. Another 13% describe themselves as partially prepared, and 1% each say they are either not prepared or not affected by the regulations.

"Finance teams are playing a pivotal role in turning sustainability goals into measurable outcomes under the new ESG reporting requirements," says Lauren Haxby, Practise Director at Robert Half. "While most teams feel confident in their preparedness, others acknowledge gaps that could hinder their ability to meet the new climate-related disclosure requirements, underscoring the need for timely action and strategic investment in ESG capabilities."

Key challenges remain

Despite high levels of reported preparedness, persistent challenges continue to affect finance teams as they strive to meet the new requirements. Only 3% of survey respondents say they face no challenges. The main issues cited are data quality, flagged by 41% of finance leaders, and data availability, highlighted by 32%. Additional difficulties include integration with existing systems and processes (28%), resource constraints (27%), limited internal expertise (27%) and obtaining leadership buy-in and understanding (24%).

To address these concerns, finance teams are adopting a range of measures. According to the research, 38% are integrating ESG reporting processes with existing systems, while 37% are investing in new technology and software. Upskilling is another priority, with 34% of teams providing training for existing staff, and 31% developing new internal policies or procedures. The establishment of dedicated ESG or sustainability reporting roles is occurring in 31% of organisations, while 28% are hiring for new ESG-focused positions.

"The road to effective reporting is paved with operational and strategic hurdles. The need for robust systems, talent, and governance frameworks to support accurate and reliable ESG disclosures is essential as reporting becomes more complex and regulated," says Haxby.

Skills gaps identified

The study reveals that the single biggest skills gaps identified by finance teams in relation to ESG reporting are not technical, but interpersonal and strategic. Stakeholder management is highlighted by 25% of teams, and strategy design by 21%. Other areas where gaps were noted include understanding of ESG legislation (19%), change management (18%) and data governance (14%).

"The skills gap we're seeing is less about accounting principles and more about human-centric capabilities. ESG reporting is as much a communication and leadership exercise as it is a financial one. This shifts the talent conversation as companies don't just need accountants who can crunch numbers, they need strategic thinkers who can navigate complex relationships, drive internal change, and translate intricate data into a compelling narrative for investors and the public," concludes Haxby.

The survey responses were collected from organisations of all sizes across Australia, encompassing both the private and public sectors and reflecting a broad industry perspective on the impact and implementation of new ESG reporting standards.