New report shows HR departments are being 'proactive' in addressing the challenges
HR departments in Australia say there are challenges with the new Environmental, Social, and Governance (ESG) reporting obligations, despite confidence that they are prepared for the process.
New data from Robert Half found 35% of employers have assigned ESG duty to their HR teams, where 87% said they are very or somewhat prepared to meet the new requirements.
According to the report, 29% of HR departments feel "very well prepared" for the new ESG reporting duties, while 58% feel "somewhat prepared."
Only 11% of HR departments do not feel prepared, while two per cent said they are unsure.
"HR teams are demonstrating a strong level of preparedness for new ESG reporting demands," said Emma Sestic, Associate Director at Robert Half, in a statement.
The new requirement, which took effect in January, makes it mandatory for Australian employers to disclose climate-related risks and opportunities, or the Environmental metric, that will impact their business.
They are also asked to report on broader sustainability-related risks and opportunities, including the Social and Governance metrics. However, this remains voluntary for organisations.
Challenges with ESG reporting
Despite their confidence in their new reporting duties, some employers acknowledge existing technical and skills gaps that may become challenges to their new obligations.
The top challenge, according to HR departments, is ensuring data quality and reliability, as cited by 35% of the respondents. Other challenges include:
- Time and resourcing constraints (30%)
- Data availability and consistency across different systems (29%)
- Complexity of assurance and audit requirements for the Social data (28%)
- Difficulty integrating HR data with other corporate reporting systems (27%)
Meanwhile, HR leaders also recognised that they may need new or enhanced skillsets to effectively manage ESG reporting duties in the next three to five years.
Nearly half of the respondents (45%) said HR lacks data analytics and insights skills, which is among the top critical skillsets required for their new responsibilities. Other needed skills that they think HR lacks include:
- Technology and HRIS expertise (40%)
- ESG framework acumen (39%)
- Risk management and compliance (35%)
- Cross-functional collaboration (29%)
- Change management (28%)
HR teams being 'proactive'
In the wake of these challenges, Sestic noted that HR departments are being proactive in addressing them by planning to upskill and train their existing staff (34%).
Another 31% of HR teams are establishing a cross-functional ESG working group that includes HR, while 23% said they are planning to create new dedicated ESG-focused HR roles.
A quarter of the respondents said they do not have plans for allocating or developing resources, while two per cent expect to rely heavily on external consultants.
"HR is playing a pivotal role in an organisation's response to upcoming ESG regulations. While challenges are anticipated, HR teams are taking a proactive approach ensuring they have the right skills and talent in place to meet compliance requirements within the expected timeframe," Sestic said.
