Although the majority of finance leaders (79%) say they have the data volumes today to give stakeholders the insight they want into company culture, only 37% report quantifiable KPIs in this area, said EY recently when releasing results of a survey on corporate reporting.
The survey, which gathered the views of 1,000 CFOs or financial controllers of large organisations with revenue greater than US$500m across 25 countries, found a willingness to use technology to meet the needs of greater transparency and more insight into company culture, EY noted.
“Finance leaders are under no illusion that the shift in investor focus toward company culture means there is a pressing need for them to realign corporate reporting to focus more on long-term value,” said Peter Wollmert, EY Global and EY EMEIA FAAS Leader.
No longer seen as a ‘soft’ issue that has little to do with the value of their organisations, 83% of EY survey respondents say that a healthy corporate culture in which values or behaviours are consistently embraced is critical to building trust, and 81% say it helps reduce risk, according to survey results.
Despite this acknowledgment, there is a lack of action turning the need for these insights into reality, Wollmert points out.
- 74% of finance leaders surveyed say that investors are increasingly focused on non-financial information
- 60% of group CFOs say that the quality of finance data produced by AI cannot be trusted in the same way as data from existing finance systems.
- The top risks cited in relation to turning non-financial data into reporting information are maintaining data privacy (33%) data security (29%), and the lack of either robust data management systems (21%) or controls (17%) for non-financial information
“Transparent, forward-looking information – based on a wider balance between financial and nonfinancial information – requires changes, not only to frameworks and practices, but also to mindset and culture,” Wollmert advised. “In other words, a change of attitude is required if corporate reporting is to offer stakeholders open and transparent information about value creation.”
To embed the critical role of culture in corporate reporting, EY advises businesses to put in place a robust approach to culture reporting, invest in the right talent mix to drive change and build trust and ethical algorithms into AI that can provide the insights that investors increasingly require.