PwC increases ESG services

PricewaterhouseCoopers is broadening its array of environmental, social and governance services to help clients deal with growing demands for sustainability and climate risk reporting and assurance on their disclosures.

Investors in ESG funds and regulators like the Securities and Exchange Commission are calling for improved sustainability reporting. Last month, PwC released its Next in Work Pulse Survey, which indicated that 42% of companies are planning to improve ESG reporting over the next few months in response to investors and other stakeholders (see story). Companies are leveraging data and technology to meet these demands.

"ESG is one of those topics that is high on the priority list of business leaders,” said Wes Bricker, vice chair and U.S. trust solutions co-leader at PwC. “It’s high on their priority list because it’s relevant to businesses and how they create value. Boards want to know how corporate strategies are incorporating a view about the impact on the environment, whether it's carbon or water usage or plastics. They also want to know the human capital strategy, which is the essence of ESG. And boards want to understand management’s plans around how to govern all of this. Do they have high-quality information and reporting? We’re seeing companies increasingly are pledging very ambitious climate targets and plans.”

Over 25% of Fortune 500 companies have announced commitments to drastically reduce their carbon emissions by 2050 to net zero. “If you were to look at the pace of change, it’s a steep upward slope where I expect Fortune 500 companies to come out with more explicit net-zero commitments,” said Bricker. “There’s an important series of discussions for a management team, like 'How fast can we transform the business? What will it cost? What are the milestones that we’ll use to judge our progress?' We’re seeing ambitious climate targets. When you get to the nuts and bolts of a net-zero commitment, routinely you get into a discussion about data and technology.”

PwC’s clients are implementing systems to keep track of their progress toward those goals, along with data on their environmental impact. “That helps them reduce their carbon emissions over time,” said Bricker. “It offers a more streamlined and integrated approach compared to what today is routinely the case, where it’s a manual, complex reporting process that offers limited ability to aggregate and visualize data.”

While the majority of S&P 500 companies have sustainability reports available on their websites, many are done using manual processes for period-end reviews, mainly designed for communication outside the company instead of ongoing management decision-making. “We're seeing a shift from that complex manual process to a technology-enabled integrated solution that helps with consistent, reliable and accurate reporting,” said Bricker.

PwC is helping clients by offering attestation and consulting services. “For companies where independence is an attribute of our service, we are providing attestation services,” said Bricker. “That’s valuable for companies and their boards and stakeholders to receive because it adds confidence in the quality and the reliability of the report. That starts with understanding the measures that are being reported. It goes to understanding the data that is being accumulated and summarized into portraying where a company is and the progress they've made. It also goes to the processes and the controls that are needed in order to present the information reliably.”

For clients where independence is not as important an attribute of the service, PwC acts as an advisor or a consultant, helping them design their ESG reporting processes. “That starts with understanding what it is that they’re reporting,” said Bricker. “Is it consistent, comparable and decision-useful? It goes to assessing and helping them accumulate the relevant data design, the right processes, the right standards, drawing on the standards that are developed and available widely for companies ... We help companies prepare and report consistent, comparable and decision-useful information so that their stakeholders can get a good sense of the commitments that they’ve made and the progress that they’re delivering.”

PwC recently reorganized the firm into two areas — Trust Solutions and Consulting Solutions — to emphasize the concepts of trust and sustained outcomes (see story). But Bricker sees ESG cutting across all the different service areas at the firm.

“ESG reporting is a capability that we see being relevant across the entire firm, and all of our services,” he said. “We’ve taken that approach by providing training for all of our partners, whether you’re sitting in trust or consulting, whether you’re in a specialty group or whether you’re in more of a standardized service. All of our partners, all of our teams need to understand ESG and how it connects to business, how it impacts our clients and the services that we deliver when it comes to trust solutions. We’ve trained all of our partners on the connection of ESG to our financial statement audits and financial reporting and the attestation services that we can provide on ESG metrics.”

Bricker is a former chief accountant at the SEC, and he will be watching for the climate risk disclosures that the commission is expected to begin demanding from companies under its new chairman, Gary Gensler, after the former acting chair, Commissioner Allison Herren Lee, put out a request for comment in the spring (see story).

“I can’t speculate on where the SEC might go,” said Bricker. “Apart from what Chair Gensler has said, yes, this is very much part of the agenda going forward. He’s building on the work of prior commissions. Carbon reporting and human capital are on the agenda. Acting chair Lee delivered a request for input that was a great service to our markets by bringing attention to a number of different topics and areas on which there may be agreement and there may be a diversity of views to be provided.”

PwC submitted a letter in June in response to the SEC’s request for input. “We emphasized the importance of high-quality data in the markets to support capital market participants’ decisions and to support the confidence that they rightly expect in the quality of information that they use,” said Bricker. “I do think that the market has moved ahead of policymakers. The market reflects that 90-plus percent of the S&P 500 companies are already reporting ESG information on their websites, not because it’s mandated. It’s voluntary. But it’s a market expectation that companies should be transparent about where they are and where they’re going and how it connects to their strategy. That’s true across industries.”

PwC is also expected to get involved in the International Financial Reporting Standards Foundation’s efforts to set up an International Sustainability Standards Board. “We will do our part in providing our best thinking about the structure for setting standards and the content of standards,” said Bricker. “For example, we have developed a relationship with the [Sustainability Accounting Standards Board] to deliver the first-of-a-kind XBRL taxonomy for SASB ... . We’ll continue to do that with each of the standard-setters who look to us for our experience.”