Global Finance Leaders Turn to AI to Solve ESG Data Problems: EY Survey
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Key Impact Points:
- 96% of Global CFOs Concerned About Reliability of Corporate Reporting Data
- Over half of investors (57%) believe AI could assess data credibility and accuracy.
- Finance leaders are concerned about AI’s costs and compliance but recognize its potential.
Finance chiefs globally are grappling with concerns over the integrity and reliability of nonfinancial data in corporate reporting, according to the 2024 EY Global Corporate Reporting Survey. A staggering 96% of finance leaders express worry that their organizations’ nonfinancial data is not fit for purpose to support decision-making, citing problems with data formats (39%) and inconsistencies (35%).
Half of the finance leaders surveyed fear that organizations will miss vital sustainability targets in the coming years. Only 47% of finance leaders and 53% of investors believe most corporates are on track to achieve stated goals. The focus on nonfinancial drivers of value is intensifying, with 69% of finance leaders noticing more investor inquiries about these issues compared to two years ago.
“These are tumultuous times for all business leaders and finance chiefs are no exception,” says Myles Corson, EY Global and Americas Strategy and Markets Leader, Financial Accounting Advisory Services. “The task of guiding an organization through short-term volatility while keeping a firm hand on long-term growth relies in no small part on the finance function’s effective use of data to paint a clear picture of future plans and prospects. But it’s clear there are major worries among CFOs and the investor community around data transparency and nonfinancial information, which they cannot afford to ignore.”
Investors are hopeful that new reporting standards could improve sustainability disclosures, with 78% believing new regulations could have a positive impact. However, more than half of finance leaders (55%) expect the costs to be burdensome, and 44% believe meeting new rules will be highly complex.
“Finance leaders’ apprehension around businesses’ ability to meet crucial goals underscores the growing importance of building confidence in reporting on sustainability efforts,” says Nicolas Lecoq, EY Global Financial Accounting Advisory Services Leader. “Customers, shareholders, regulators and investors increasingly hold companies to account for their environmental impact and commitment to sustainable practices. This means that the integrity of corporate reporting is now more critical than ever—it reflects an organization’s dedication to sustainability goals and can directly impact the trust that investors, and the wider public, are willing to invest in it.”
Amid these concerns, more than half of investors (57%) believe AI could be instrumental in assessing the credibility and accuracy of financial and nonfinancial disclosures. Additionally, 52% think AI could assess alternative data, and 51% believe it could help spot discrepancies in company disclosures.
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While 43% of finance leaders are enthusiastic about using AI in corporate reporting, 29% are waiting until the risks are better understood. Concerns about costs (39%) and compliance with AI-related rules and regulations (36%) persist. Only 32% report having high-grade technology in place for managing and analyzing data.
“While no one can pretend there’s an easy path ahead, there are certainly ways in which organizations can successfully navigate the challenges,” Corson adds. “Finance leaders who focus on creating sustained value and build confidence in reporting and harnessing technology to enrich data analytics can rest assured that they are heading in the right direction.”
Lecoq concurs: “Although AI is still in the early stages of adoption, and while it’s clear that many finance leaders are nervous about potential costs, compliance and wider possible risks, there’s no doubting its immense potential to transform data analytics and corporate reporting for the benefit of all.”
For more detailed insights, refer to the 2024 EY Global Corporate Reporting Survey.