The CFO Coalition for the SDGs (sustainable development goals) met in person for the first time earlier this month at the UN Global Compact SDG Investment Forum in Paris.
One taskforce member, Jill Klindt, chief financial officer at global software-as-a-service (SaaS) platform Workiva, spoke to the meeting about SDG-aligned investments and the telecom, media and technology sector, emphasizing that collaboration on environmental, social and governance (ESG) reporting is essential if private capital is to be mobilized to finance the UN SDGs.
“Thinking holistically about ESG reporting is still new for a lot of people,” she tells Euromoney after the forum, speaking from the Workiva headquarters in Ames, Iowa. “The event illustrated how ESG-aligned investments are crucial to business transformation. I wanted to highlight how small and mid-size companies can take a meaningful action through innovation and tech investments.”
Klindt, an Iowa State University alumna who has lived in Ames since graduating, joined Workiva in 2008, having previously worked at CitiMortgage and Wells Fargo.
She draws on her experience moving from large firms to startups to think strategically about scale. “Very small companies will have a different focus and different needs, so you have to think about how to shift resources as you grow,” she says.
SME reporting needs
Klindt points out that many small and medium-sized enterprises (SMEs) still need to be equipped with the right tools to even start the ESG reporting process.
In the US, larger firms disclose greenhouse gas (GHG) emissions at 2.5 times the rate of smaller firms, according to the Conference Board and Heidrick & Struggles’ 2022 Sustainability Disclosure Practices report. Yet the SEC Climate rule – proposed in March and due to be finalized in December – confirms that ESG reporting is a business reality for all firms.
Workiva conducted an ESG reporting survey in June that included 1,300 participants across different regions and sectors. Seventy two percent of respondents to the survey did not feel confident in the ESG data currently being reported to stakeholders.
“Corporates need the right tools to deliver consistent, auditable data that can be reported over time and shared with the investment community, the regulators, rating agencies and even clients,” Klindt says.
Companies should look at SDGs not with the ambition to support all of them but the ones that make sense to their business
The firm developed and launched an ESG reporting product last year that aims to facilitate the data collection and organization process for companies for external use. The service provides materiality assessment templates, frameworks adapted to different regulations and auditable data packaging.
The CFO Coalition for the SDGs also makes available a set of key performance indicators to help integrate and measure sustainable development in corporate finance and investing, with examples by sector. The blueprint of collective experience shows climate action (SDG13), responsible production and consumption (SDG12), and decent work and economic growth (SDG8) as the most implemented principles through KPIs.
These include GHG emission-reduction targets, use of recycled and or renewable materials, food waste reduction and apprenticeship or training programmes.
“Companies should look at SDGs not with the ambition to support all of them but the ones that make sense to their business,” says Klindt. “There is an environmental focus in Europe because it has been at the forefront of the discussion around business operations for much longer than in the US.”
Beyond emissions
Companies need to collect consistent ESG data, including diversity data, to measure progress. Klindt believes that some level of enforcement at the regulatory level is needed, with greater international standardization of disclosure norms.
“You cannot expect to have diverse candidates coming out of a system that is not set up to promote diversity candidates,” she says.
Workiva has focused its efforts on diversity, equity and inclusion (DEI) metrics, partnering with a female-founded startup PowerToFly in the US to help increase access to tech industry jobs to women and underrepresented candidates.
DEI data collection is not as straightforward in Europe since the enforcement of the EU General Data Protection Regulation (GDPR) in 2018, which controls the collection, use, storage and maintenance of ‘personal data’, and is especially strict for ‘special categories of personal data’, including sexual orientation, ethnic origins, religious beliefs and health.
As a result, few European corporates currently disclose diversity data or even use self-identification surveys to collect it.
For Klindt, international regulators need to continuously promote consistent disclosure standards around ESG data. Providing a global benchmark, she says, would give companies a place to start.