Dive brief:
- PriceWaterhouseCoopers has rolled out an app to help finance leaders translate their company's environmental, social and governance (ESG) values into investment-grade reporting data, the firm says.
- The app is based on standards developed by the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-related Financial Disclosures (TCFD), and will be updated when the groups make changes to their standards, said Wes Bricker, PwC vice chair and former chief accountant at the Securities and Exchange Commission (SEC). "Those are living standards and change from time to time," Bricker said, according to Accounting Today. "We can pull that into the app."
- The ESG Pulse app follows the release, in September, of ESG reporting standards by PwC and the other Big-4 accounting firms at the World Economic Forum in Davos, Switzerland.
Dive insight:
Companies have talked for years about incorporating values other than profit-making into their mission. Last year, the Business Roundtable released a statement saying its members, some of the largest companies in the United States, were committed to that goal.
"While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders," the statement said.
The group identified stakeholders as customers, employees, suppliers, communities and shareholders.
The challenge for finance leaders is measuring these hard-to-quantify values in their financial reporting.
The app is intended to help them do that by consolidating the ESG data generated by their business units and regions into a single database and giving them a set of metrics, categorized by industry, for measuring their performance and benchmarking it against others in their industry.
Greenhouse gas emissions, employee diversity and inclusion, employee health and safety, and data security are among the measurable performance indicators in the app.
To the extent other organizations align their standards to SASB and TCFD, the app would reflect those values as well. "The app is designed in a flexible way," Bricker said.
Other organizations whose standards touch on ESG values include the International Integrated Reporting Council, the Global Reporting Initiative, the Carbon Disclosure Project, and the Climate Disclosure Standards Board.
Voluntary standards
The app is future-looking to the extent ESG standards eventually become compliance issues.
ESG information is useful to investors, and increasingly important to investors who rate ESG values highly, but companies aren't required to measure and report on their ESG performance.
Bricker, wearing his former SEC chief accountant hat, says he doesn't know whether the regulator will make the standards part of its reporting requirements. But he does see the agency taking more of an interest in them.
There have been "a variety of recent enforcement cases that focused on nonfinancial information that the SEC alleged was wrong and created liability," he said, Accountng Today reported. "To me that's a reminder to all of us that information needs to be investment grade if it's introduced into the investment marketplace, wherever it's reported, whether it's a website or a disclosure document if it's being used in the investment process as ESG information is."
