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Three-quarters of firms globally are not ready for new ESG rules, KPMG finds
Published by Jessica Weisman-Pitts
Posted on September 26, 2023
2 min readLast updated: January 31, 2026
Global Banking & Finance Review®
Company
Published by Jessica Weisman-Pitts
Posted on September 26, 2023
2 min readLast updated: January 31, 2026
LONDON (Reuters) – Three-quarters of companies globally are not ready to have their environmental, social and governance (ESG) data audited externally months before new regulations kick in, according to a new report from KPMG published on Tuesday.
LONDON (Reuters) – Three-quarters of companies globally are not ready to have their environmental, social and governance (ESG) data audited externally months before new regulations kick in, according to a new report from KPMG published on Tuesday.
Stricter European Union, U.S. and global rules are being introduced, mostly in time for the 2024 reporting season, to replace a patchwork of voluntary private sector practices for listed companies to make climate-related disclosures.
Regulators say external auditing of sustainability-related data – while not as extensive as financial auditing – is crucial for giving investors information free of misleading environmental claims, known as greenwashing.
The EU rules will require disclosures be audited while countries adopting the International Sustainability Standards Board’s reporting requirements can also demand external checking.
Yet of 750 companies surveyed by KPMG, only 25% feel they are sufficiently prepared.
“Being ESG assurance ready means identifying the relevant regulatory framework and having the right metrics with robust systems, processes, controls and governance for collecting and managing the data,” said Larry Bradley, KPMG’s Global Head of Audit.
KPMG’s ESG Assurance Maturity Index assessed the views of executives and board members across industries, regions and different firm sizes to measure companies preparedness.
Just over half of companies surveyed currently get some level of external auditing of their ESG disclosures, but of those only 14% are obtaining reasonable assurance and 16% limited assurance for all of their ESG disclosures as new rules will require, according to KPMG’s research.
“Now there will be regulatory and assurance requirements to report accurate information, which raises the bar on controls and processes as well as qualitative statements that will need to be made around the data,” Mike Shannon, Global Head of ESG Assurance at KPMG, said.
Larger companies are better prepared for auditing than smaller firms, KPMG found, while among countries France, Japan and the United States came out on top, with Brazil and China ranked worst.
(Reporting by Tommy Reggiori Wilkes)
ESG stands for Environmental, Social, and Governance. It refers to the three central factors used to measure the sustainability and societal impact of an investment in a company.
Greenwashing is the practice of companies misleading consumers regarding their environmental practices or the environmental benefits of a product or service.
External auditing is an independent examination of financial information of any entity, whether profit-oriented or not, irrespective of its size or legal form.
Compliance in finance refers to the process of adhering to laws, regulations, guidelines, and specifications relevant to the financial industry.
The KPMG ESG Assurance Maturity Index is a tool used to assess the preparedness of companies regarding ESG compliance and external auditing.
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