Gregory KozakA recent EY report reveals a startling concern among financial leaders worldwide about the reliability of non-financial data in corporate reporting. An overwhelming 96% of financial executives express worry about the integrity and credibility of this data. The study highlights growing fears that unsatisfactory data quality could jeopardize critical global objectives, affecting company sustainability goals.
Data integrity is a pressing issue, with non-financial data often deemed insufficient for decision-making processes. More than half of the investors surveyed believe that artificial intelligence could play a pivotal role in assessing data credibility and accuracy and identifying inconsistencies. A significant 57% of investors consider AI essential for evaluating financial and non-financial information.
The study, polling over 2,800 global financial leaders and institutional investors, underscores the challenges firms face in both financial and non-financial reporting. It shows that only a minority of companies are expected to reach their sustainability targets, with concerns about potential allegations of “greenwashing” against them.
Stakeholders are increasingly focused on non-financial value drivers. 69% of finance executives have noticed heightened investor inquiries into these areas compared to two years ago. Despite optimism about new reporting standards possibly aiding sustainability efforts, over half of financial leaders expect burdensome costs and complex compliance issues.
While there’s hope that technology, particularly AI, could address these issues, acceptance and understanding of its risks remain a hurdle. Financial leaders remain divided on the costs and compliance concerns surrounding AI deployment. As companies strive to enhance their reporting processes, the role of technology in ensuring data integrity is increasingly becoming a focal point.
Maximizing Data Integrity in Corporate Reporting: Tips and Insights
The concern over the integrity of non-financial data in corporate reporting is gaining traction, as highlighted in a recent report. With 96% of financial executives expressing worry about data reliability, it’s crucial to explore strategies and insights that can help companies navigate these challenges effectively.
1. Embrace AI and Machine Learning
As many investors believe, artificial intelligence can be pivotal in ensuring the accuracy and credibility of both financial and non-financial data. AI’s ability to detect anomalies and inconsistencies in large data sets can be a game-changer. Companies should consider investing in AI technology to streamline data verification processes and enhance decision-making accuracy.
2. Focus on Data Quality and Governance
Improving data quality starts with strong governance policies. Establish clear data standards and invest in tools that automate data collection and analysis. By ensuring your team has access to reliable data, companies can mitigate the risks associated with poor data quality and reduce the potential for “greenwashing” allegations.
3. Enhance Collaboration Between Financial and Non-Financial Teams
Silos between financial and non-financial teams can hinder data integrity. Encourage collaboration between these departments to ensure all financial and non-financial data are aligned with the company’s objectives. Regular cross-departmental meetings can help bridge gaps and foster a culture of transparency and reliability.
4. Stay Informed About Reporting Standards
As new reporting standards emerge, staying informed is essential for compliance and strategic advantage. Understanding these standards can help companies better communicate their sustainability efforts and address investor concerns effectively. Engage with industry groups and participate in forums to keep abreast of evolving requirements.
5. Prioritize Continuous Training and Education
Equip your team with the knowledge they need to utilize new technologies and understand compliance requirements. Ongoing training can empower employees to handle complex data sets accurately and stay updated on the evolving landscape of corporate reporting.
Interesting Facts:
– Companies that effectively integrate non-financial data into their reporting processes often see improved stakeholder trust and higher market valuation.
– AI is predicted to play a central role in the future of auditing, with its potential to reduce costs and increase efficiency in verifying financial and non-financial information.
For further insights into embracing technology in corporate environments, consider exploring IBM and Microsoft, as both are leaders in AI and data management solutions.
