Consumer executives report making progress toward a reasonable level of assurance, however it is measured.

It is possible that the small percentage of companies that have yet to begin are apprehensive to adjust for regulations that might change in the future. However, despite the stay on the SEC's new climate-related reporting mandate, other regulations already in play suggest that starting sooner than later can be advantageous.

*The objective of a limited assurance engagement is for the service provider to express a conclusion about whether it is aware of any material modifications that a company should make for the subject matter to be in accordance with the relevant criteria. By contrast, the objective of a reasonable assurance engagement, which provides the same level of assurance as an audit of a company's financial statements, is to express an opinion on whether the subject matter is, in all material respects, in accordance with the relevant criteria.

Concrete steps toward ESG goals

Consumer executives say their companies have already taken several steps toward their ESG goals; notably, they have developed a roadmap (46%), refined their operations and processes (45%), and published a sustainability report (43%).

Many companies have identified what is important to their ESG journey and are making significant progress toward their goals. However, there is still a considerable way to go for those who have not yet laid the foundation, and a proactive, sooner-than-later approach is suggested to keep pace with industry requirements.

For many consumer companies, gathering data from within the supply chain is particularly difficult. And for many, it's their first time gathering this data. This is consistent with other industries that participated in our Sustainability Action Report survey, with 88% of all total respondents citing data quality as one of their top three challenges.

This is associated with many questions, including “What data are we gathering?”, “What technology can we utilize to gather it?” and “How can we utilize automation technology to ensure that we gather it in a more efficient and effective way?” A more effective internal audit strategy can, in part, help answer these questions—shedding light on the data gaps that may be necessary to fill on the way to ESG reporting compliance.

Disclosure of Scope 1 and Scope 2 GHG emissions under way, while Scope 3 lags behind

A roughly equal number of consumer executives say they are currently preparing and disclosing Scope 1 (52%) and Scope 2 (49%) GHG emissions; only a quarter (25%) are currently preparing and disclosing Scope 3 GHG emissions.

Regardless of where companies are on their ESG journey, Scope 1 and Scope 2 GHG emissions are important to disclose. And while the SEC’s March 6 ruling excludes Scope 3 from its reporting requirements, other stakeholders and reporting bodies, such as the CSRD, expect them to be reflected on their climate-related financial reports.

ESG capacity building has become a priority in the consumer industry, with 80% of respondents saying their company has created a new internal role or responsibility to prepare for increased ESG disclosure requirements. Those further along in their ESG journey (that have a plan in place and know what they need to move forward), might designate an ESG controller to be present for data collection, analysis, and management.

Despite where the overall responsibility lies, 85% of executives say their company has, or is in the process of establishing, an ESG council or working group inclusive of personnel from various functions (e.g., accounting, finance, legal, HR). These companies have a regular meeting cadence (49% of which meet quarterly) to address progress regarding ESG.

New objective to find external ESG assurance

More than half (56%) of consumer executives say they plan to seek external assurance over ESG disclosures for the first time in the next reporting cycle.

For those planning to seek external assurance for their ESG disclosures, the time to start preparing is now. Not only is timeliness important for meeting stakeholder expectations for accurate and reliable information, but resources (external and internal) are typically limited. Being proactive allows for the opportunity to take advantage of the appropriate solutions for making progress toward ESG goals.