As regulators across the globe mandate environmental, social, and governance (ESG) criteria and disclosure requirements, ESG has become a prominent business priority, presenting a strategic growth opportunity for audit firms.

Heightened social, governmental, and consumer attention on the broader impact of corporations has brought ESG audits under the microscope. Data shows that organisations with strong ESG propositions can expect better business outcomes. Greater reporting transparency reduces ESG risks and provides more opportunity for organisations to enter new markets and expand into existing ones.

The challenge for organisations is developing robust controls, oversight, and information accuracy required to not only meet new ESG regulatory requirements but foster an ESG culture that drives positive business outcomes.   

The ESG Struggle

Studies show that organisations globally are struggling with ESG reporting. 75% of companies globally feel they have a long way to go to have their ESG data assured and meet new regulatory requirements.

87% of leaders are looking at integrating ESG data systems with financial reporting systems to gain consistent financial controls over non-financial data and capably manage ESG compliance.

For Regulators across APAC and Australia, ESG is becoming an opportunity area as ESG disclosures start influencing investor decisions.

All these developments create the perfect storm for audit companies to realise value from ESG. 

Realising value from ESG in 2024

As ESG reporting and scrutiny increases, audit firms become uniquely positioned to expand their service offerings and make audit a more value-driven activity.

Audit firms can now assist clients by preparing ESG offerings, supporting with data, providing ESG assurances and ESG-related tax optimisation strategies, and helping their clients stay compliant and competitive.

Here are a few ways in which audit companies can realise value from ESG in the coming year.

Develop a Strong ESG Strategy

Investors are now screening opportunities based on high ESG performance and expecting exemplary ESG behaviours as these become interlinked with long-term profitability.

A robust ESG strategy provides a framework for decision making that audit firms can leverage to create significant growth opportunities. By championing ESG beyond compliance, audit firms stand positioned to assist their customers fulfil ESG commitments by developing and implementing strong ESG practices.

Drive Alignment with Customers

Audit firms that examine and mitigate internal structures that impede ESG initiatives will be better placed to find alignment with customers who can support their ESG strategy.

Some of these impediments can include:

• Partnership ecosystem that makes it difficult to find the correct stakeholders to drive ESG initiatives,
• Dated, paper-heavy, and manual processes that can be tedious, time-consuming and often error-prone, 
• Intellectual capital remaining dedicated to fact-finding and data entry rather than driving strategic value.

Audit firms that prioritise digital transformation and align with customers on similar journeys will be well suited to drive value from ESG initiatives.

Reduce Operating Costs

As the regulatory landscape evolves, the need for audit firms to digitally transform has become crucial. ESG presents an opportunity to improve operational outcomes, elevate audit quality, and reduce operational costs.

Digitally transforming manual processes has become a starting point for many audit firms pursuing ESG goals. With solutions like Thomson Reuters® Confirmation, firms have experienced significant cost savings of up to 60% whilst reducing reliance on what were once manual, paper heavy tasks.