ESG (environmental, social, governance) reporting is a growing market. According to McKinsey, “ESG issues represent critical challenges for both boards and executive teams.” One question companies are facing is “who is responsible for ESG reporting?”

Some companies have – or will have – a Chief Sustainability Officer (CSO). Nike, Mastercard, P&G, Nissan and others have CSOs. As companies develop their ESG strategies, they need to find a “home” for ESG reporting. That “home” is often in the Office of Finance.

According to the CFO of a software company, “Sustainability is now a key consideration for the finance function. Sustainability work requires alignment with financial priorities such as ESG reporting, investor relations, capital management, carbon accounting, impact measurement, corporate development and even product development.”

Picture this: embedding sustainability metrics into the finance department. This approach brings the discipline and structure of financial management and reporting to those sustainability metrics. Companies can set key performance indicators (KPIs) for ESG scorecards, create ESG dashboards and more.

This approach makes a lot of sense. CFOs have a broad skill set. CFOs are experts at measuring, analyzing and reporting data. They understand the need to have a “single source of the truth,” accurate numbers, automation to reduce manual errors and the need for auditability and transparency.

More importantly, the SEC has proposed regulations that would require public companies to disclose extensive ESG information in SEC filings. CFOs, along with CEOs, will have to certify the accuracy of the data in the filing. This means that public companies will need to address ESG reporting with the same discipline they have with financial data. It needs to be accurate, complete and auditable.

According to EY, “There is increased pressure on corporates to improve their ESG reporting – from equity investors, insurers, lenders, bondholders and asset managers, as well as customers who all want more detail on ESG factors to assess the full impact of their decisions. Finance leaders should move quickly to meet stakeholders’ expectations and articulate a unique narrative of how they create long-term value.”

EY also states that enhanced ESG reporting is an opportunity for CFOs to “build the advanced analytics capability to extract insights from data and reboot the approach to FP&A to create more agile scenario planning capabilities.”

If you are a CFO of a public company, now is the time to develop an ESG reporting strategy.

Read more in our series on ESG reporting:

FP&A Done Right: ESG Reporting Tools