Audit Committee Chairs show keen interest and understanding of ESG activities
News types: Generic Announcement
Published: 19 June 2023
The Financial Reporting Council (FRC) has today published a research report about Audit Committee Chairs’ views on, and approach to Environmental, Social and Corporate Governance (ESG) activities and reporting.
The report, commissioned by the FRC and conducted by independent research agency YouGov, involved qualitative interviews with 40 ACCs of Public Interest Entities (PIEs), representing a diverse range of organisations, including FTSE 100 and FTSE 250 companies, other listed equities, building societies, and unlisted banks.
Aimed at gaining a deeper understanding of ACCs' views and approaches towards ESG reporting and assurance, the report highlights the work that ACCs are already doing in this space, recognising the importance of ESG as an integral part of good business practice and effective stakeholder communication. The respondents noted its increased significance in recent years, triggered by the COVID-19 pandemic and heightened awareness of environmental and social issues.
ACCs showed a strong interest and understanding of ESG activities within their organisations. However, their involvement in decision-making processes, particularly related to environmental and social elements, is often limited and their primary role lies in risk management, compliance, and ensuring effective reporting.
Some interviewees also expressed concerns about the broad and evolving nature of ESG, making consistent measurement and reporting challenging across sectors and markets. They called for practical, sector-specific guidance to measure environmental and social activities and welcome best practice examples to ensure meaningful ESG reporting without excessive reporting requirements.
Mark Babington, Executive Director of Regulatory Standards at the FRC, said:
"We are pleased to see that Audit Committee Chairs are already focusing on, and recognise the importance of, ESG reporting and assurance for their organisations and stakeholders - and this report provides valuable insights into the current practices and challenges faced by ACCs in this rapidly evolving area.
“We are committed to supporting ACCs with practical guidance and best practice examples to ensure high-quality and consistent ESG reporting."