Fears about the integrity and reliability of crucial corporate reporting data are weighing on the minds of finance leaders around the world, but hopes are rising that Artificial Intelligence (AI) may offer some much-needed answers, according to the 2024 EY Global Corporate Reporting Survey.

The ninth edition of the survey explores the views of more than 2,000 finance leaders and 815 institutional investors around the world on the state of corporate reporting. It assesses the major challenges businesses are facing in financial and nonfinancial reporting, the actions they are taking and the outlook for the coming years.

Among the key findings from the research is an almost universal concern amongst finance leaders that the nonfinancial data produced by their organizations is not fit for purpose to support decision-making – 96% of respondents say they worry about the integrity and reliability of this data, and many have reported problems with data formats (39%) and inconsistencies (35%).

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The findings sound further alarms on corporate reporting standards, as they expose fears over the impact that poor data may have on important global goals. Half of those surveyed are seriously worried that organizations will miss vital sustainability targets over the coming years – only 47% of finance leaders and 53% of investors believe that most corporates are on track to achieve stated goals.

The survey shows that the focus by stakeholders on nonfinancial drivers of value is intensifying, with more than two-thirds of finance leaders (69%) saying that they have noticed investors asking more questions about these issues than they did two years ago.

Many of those surveyed (55%) harbor fears that allegations of greenwashing could be leveled against companies in their various industries, highlighting underlying doubts that nonfinancial disclosures are backed up by the necessary due diligence, data and processes.

Investors are hopeful that new reporting standards could help businesses’ efforts to improve sustainability disclosures – 78% of respondents say they think new regulations could have a positive impact. However, finance leaders seem to have worries: more than half (55%) say they expect costs to be burdensome, and two-fifths (44%) believe that meeting the new rules would be highly complex.

Myles Corson, EY Global and Americas Strategy and Markets Leader, Financial Accounting Advisory Services, says: “These are tumultuous times for all business leaders and finance chiefs are no exception. The task of guiding an organization through short-term volatility while keeping a firm hand on long-term growth relies in no small part on the finance function’s effective use of data to paint a clear picture of future plans and prospects. But it’s clear there are major worries among CFOs and the investor community around data transparency and nonfinancial information, which they cannot afford to ignore.”

Nicolas Lecoq, EY Global Financial Accounting Advisory Services Leader, says: “Finance leaders’ apprehension around businesses’ ability to meet crucial goals underscores the growing importance of building confidence in reporting on sustainability efforts. Customers, shareholders, regulators and investors increasingly hold companies to account for their environmental impact and commitment to sustainable practices. This means that the integrity of corporate reporting is now more critical than ever – it reflects an organization’s dedication to sustainability goals and can directly impact the trust that investors, and the wider public, are willing to invest in it.”

Hopes are high, however, that technology could provide urgently needed answers. More than half of investors (57%) believe that AI could prove very useful as a tool to assess the credibility and accuracy of financial and nonfinancial disclosures, while 52% think it could be used to assess alternative data, and 51% believe it could help to spot discrepancies in company disclosures.

Two-fifths of finance leader respondents (43%) say they are enthusiastic about using AI in corporate reporting, however, more than one-quarter (29%) say they are holding out until the risks of the technology are better understood; 39% are apprehensive about the likely costs; and 36% are worries about ensuring they comply with all the relevant rules and regulations relating to AI. Only one-third (32%) say they already have high-grade technology in place for managing and analyzing data.

Corson says: “While no one can pretend there’s an easy path ahead, there are certainly ways in which organizations can successfully navigate the challenges. Finance leaders who focus on creating sustained value and build confidence in reporting and harnessing technology to enrich data analytics can rest assured that they are heading in the right direction.”

Lecoq says: “Although AI is still in the early stages of adoption, and while it’s clear that many finance leaders are nervous about potential costs, compliance and wider possible risks, there’s no doubting its immense potential to transform data analytics and corporate reporting for the benefit of all.”