RSM Survey: Most Mid-Sized Companies in 'Wait-and-See' Mode on ESG Compliance
A survey released Monday by consulting firm RSM shows that while most mid-sized companies have made progress in ESG regulatory preparation, many are waiting to see the outcome of the U.S. election before deciding their next steps.
The latest survey released by consulting firm RSM on Monday shows that although most mid-sized companies have made progress in preparing for environmental, social, and governance (ESG) regulations, many are choosing to wait for the outcome of the U.S. election before deciding whether to take further action.
The survey shows that about 75% of respondents said their companies have taken measures such as training employees and investing in technology to prepare for compliance with new rules; meanwhile, the vast majority of respondents (84%) said they are continuously monitoring developments in the sustainability field before taking further action; more than half (56%) of respondents explicitly stated they are waiting for the U.S. election results to assess subsequent compliance strategies.
The survey focuses on how companies are responding to multiple regulatory requirements, including: the U.S. Securities and Exchange Commission's (SEC) climate disclosure rule (which was stayed after being adopted in March this year), California's Climate Corporate Data Accountability Act, Canada's Fighting Against Forced Labour and Child Labour in Supply Chains Act, and the EU's corporate sustainability reporting and due diligence directives.
Anthony DeCandido, partner and co-leader of RSM US's sustainability services solutions, pointed out that these regulations are generally controversial and still face certain uncertainties, due to reasons including recent legislative amendments, unclear guidance, legal uncertainty, and implementation delays.
Regarding the SEC's climate disclosure rule, DeCandido said in an interview that companies generally believe the election has already had a significant impact on the rule's future; if former President Trump returns to the White House, the rule would at best be weakened, or could even be completely repealed. He noted that climate rules are an important priority for Democrats, but Republicans do not prioritize them.
"I think this 56% figure reflects the mindset of mid-sized company leaders: 'Maybe let's wait and see, given the rule's repeated changes, why allocate resources or budget for something uncertain?'" DeCandido said.
Although he acknowledged that corporate sustainability concepts are facing ongoing resistance, citing recent legislation in Florida as an example, he said this resistance mainly affects the extent to which companies publicly promote their ESG efforts, rather than their actual operational practices.
"What business leaders think about its importance matters less, because the regulations are already taking shape, and you have to act," he said. "In the past, we served companies because clients cared, suppliers cared, and perhaps employees would speak up. Now, it's more about viewing this as a global regulatory priority, which is why many companies have had to organize themselves this way."
Some companies are preparing for these regulations through internal means, including training and educating employees and leadership, as well as adjusting organizational policies. Sometimes, companies establish a dedicated executive as Chief Sustainability Officer; DeCandido said that while this is more common among Fortune 500 companies, some mid-sized companies are also adding this position to their governance structures.
Other companies are seeking external professional support, usually in the form of temporary consulting. These companies believe that the compliance adoption curve is steep in the first 12 to 18 months but tends to flatten once processes and infrastructure are in place, so they bring in external advisors mainly to lay the foundation.
Whether regulatory preparation is an internal or external process, DeCandido emphasized that the role of the Chief Financial Officer (CFO) is crucial.
"CFOs bear significant oversight responsibilities because in many cases, these non-financial metrics need to be presented alongside core financial statements," he said. "Few people play the role of preparer, but all CFOs have oversight responsibility for what is included in the financial statements."
The report is based on a survey conducted between August 27 and September 3, with a sample of 303 U.S. companies and 109 Canadian companies, with respondent revenues ranging from $40 million to $10 billion.