Video: Master the CSRD Double Materiality Assessment: Bridge the Gap Between ESG and Finance | Duration: 3652s | Summary: Master the CSRD Double Materiality Assessment: Bridge the Gap Between ESG and Finance

Transcript for "Master the CSRD Double Materiality Assessment: Bridge the Gap Between ESG and Finance": Hello, everybody. Good morning. Good afternoon. Thank you for joining us for our session today. Master the CSRD double materiality assessment, bridging the gap between ESG and finance. My name is Ian van der Vlucht. I'm the VP of research and sustainability at Databran, and I am thrilled to be joined today by 2 experts in the field, Katie Goode, who is ESG controller at Wells Fargo, and doctor Jeremy Osborne, who's the global head of sustainability at AICPA CEMA. So in terms of run of show for the day, I'm going to be providing a bit of context level setting, and, hopefully, we can begin with a good baseline understanding of what the heck is CSRD and what are we talking about today. But the the the real bulk of the conversation is going to be with Katie and Jeremy, and I think we have a a a lot of fun stuff to discuss and, some twists and turns to explore. So, I will try to jump into that as quickly as possible. First, a bit of general housekeeping. This event is being recorded, and the recording will be shared with everybody following the event, including the slides. If you happen to have any technical difficulties with Goldcast, then shoot us an email at marketing@dataman.com, and we will be happy to help you out. And then, we're not going to do q and a at the end. We'd like to just pack all that in to have a really delightful conversation with Jeremy and Katie. So please submit your questions as we progress, and we'll be looking to tie those into the conversation along the way. So, you know, just just, bear that in mind when something jumps up. Use the q and a function that's available in Goldcast, and, and we'll we'll weave that in. So I'm going to start with a bit of a a bit of the reality check of where we are with this, tsunami of ESG regulations. Here we can see over the past 10 years a huge growth in, in the the number of regulations, the scope of regulations. And we often think about ESG, regulation that at least historically in the context of, of environment. Now we can see here there's a a bit been a really big focus on the social and governance dimensions as well. With that, we also have the the rebound effect, greenwashing, green hushing, litigation as, as companies grapple with with the sheer volume and and substance of of all of these regulations coming their way. One of the, the the key components in this regulatory tsunami is obviously the, the evolving standards and reporting regulations that we see coming out and that, companies are being obligated by. There's been a shift towards mandatory regulations from a traditionally voluntary space that was ESG, where we see rules coming from the SEC. We have the California climate laws. We have the IFRS and ISSB. We have the corporate sustainability due diligence directive that was just passed into law, earlier this year. We have the European sustainability reporting standards that are part of the corporate sustainability reporting directive, the CSRD, that, that is going to be our theme of discussion for today. So, some of the commonalities that we see across this growing and evolving landscape of standards and regulations is a focus on governance. So, a lot of them are are kind of labeled as reporting obligations, but, they're really working to force, behavior change. It's, it's it's about who's involved, how are they involved, and with that come the processes of how you're running through this and how you're integrating that information into, into into, you know, thinking about business strategy, thinking about, business model. And in order for that to be effective, you need to have the controls in place for the information to be as as accurate and robust as possible. You need to be able to to to have that reliability for taking the best decisions off the back. Then also, how are you going to be managing this information in a in a changing landscape? So the dynamism of of ESG kind of comes into play also as you're thinking about the controls that you as a company are putting in place to navigate these waters. Now all of these also the linchpin is materiality. And they they have materiality with slightly different flavors. So, we have this nice little graphic on the right, where there can 2 2 dimensions to this, and ESG materiality was adopted from, financial accounting materiality along the way and has taken on a bit of its own flavor. So we have, on the left side, financial materiality or the outside in approach. What are the risks and opportunities, financial risks and opportunities presented to a company by, these these sustainability matters. And then on the right hand side, we have the impact dimension, which is what are the impacts that a company is having on the environment and society that need to be taken into account. So if we think about, ISSB standards, s 1 and s 2, which are, from you know, they've kind of taken on themselves from the task force on climate related financial disclosures, or we think about the SEC climate rule, then those are, more within the the financial materiality camp. You know, how do we think about the the risks and opportunities presented by climate change in in these particular instances. And on the impact side then, the global reporting initiative, GRI, on the the voluntary space, has proposed, impact materiality for a long time running. And, and that both of those kind of combine, for CSRD, and and European sustainability reporting standards produced by, by FRAG. So that's a bit of the the materiality cycle, and I think, this is a really important piece of the conversation that we're going to be exploring. So I did wanna spend just a bit of time making sure that, we had that that groundwork in place. Then the other, important aspect, that that I think we'll we'll see feature also in our conversations coming up, external assurance. And, the external assurance requirements, either limited or or reasonable in some instances, that we see and, and the veracity of of infant information and documentation of processes that that kind of, requires of companies that, that we haven't encountered in such way previously. So, very quickly, some of the unique characteristics of the corporate sustainability reporting directive and the European sustainability reporting standards, such a mouthful every time. Firstly, again, this is this is mandatory, and it's enforceable. Now the level of enforcement is dependent upon the the actual member state transpositions. But if you look at, for instance, France, which was the first country to transpose the CSRD international law, then there are actually penalties, for individual directors, in the form of fines and and potential imprisonment. So, you know, there there is teeth behind this that we haven't seen traditionally around ESG information. Then, we have approximately, best guesses, you know, around 50,000, EU domiciled companies that will be obligated under the CSRD, and then another approximately 10,000, that are located outside of the EU, but are still going to be required, to report according to the CSRD due to this extra jurisdictional component that it has. And, and if you think about the corporate sustainability, due diligence directive, that's another one that that has extra jurisdictional components that, that's gonna be really important for companies to pay attention to as, as we move forward there. Then it's grounded in double materiality as we discussed. Now a few few key components that, that we didn't touch on. So it needs to be an objective, data driven, and evidence based process. So let's move out of the realm of subjectivity. Let's move into replicability. Let's move into evidence. And, and this is a process that needs to be repeated annually, but ideally is is part of a continuous process to ensure that companies are, again, staying ahead of the curve and being proactive against this dynamic backdrop of a changing regulatory and stakeholder driven landscape. It focuses on impacts, risks, and opportunities, and you'll hear us talk about this a few times in the upcoming conversation, shorthand, IROs. And these are assessed across the impact and financial materiality dimensions, the risks and opportunities, obviously, falling into the financial side, and the positive and negative impacts falling into the impact side. Now these also need to be thought about across the entire value chain. So no longer sufficient to, to say, you know, climate is material because or not material because, you know, we we work in services, and, it's you know, we don't consume very much energy. You need to think about also your customers. You need to think about your suppliers. And if there are material risks or opportunities or impacts stemming from, the the upstream supply chain side or the downstream customer side, that pass the materiality threshold, and those also need to be considered, through this exercise. And, and that then implicates last point, which is materiality thresholds are determined at the IRO level. So no longer can you say climate is a material issue. It's actually the specific risk or opportunity or impact that needs to be articulated that implicates, climate as being material. So, you know, there is a a material risk around, sea level rise stemming from exacerbated climate change. That that level of detail is, is what's being, assessed and, and looked for through this exercise. Number 4, there's a focus on governance and controls, and, topical disclosures are oriented around, policies, actions, and targets. So, there are still metrics. So for instance, scopes 1 to 3 emissions, but these are not universally prescribed through the ESRS. And, and, you know, it's it's more about, how a company is managing these impacts, risks, and opportunities that have been identified, and where relevant, adding in those, those specific metrics. Again, external assurance is mandatory. In this instance, it's a it's a limited assurance, but, aiming to move kind of ratchet up to a mandatory, to a reasonable level. And there's going to be a new EU sustainability assurance standard to help guide this process. Finally, there is mandatory XBRL reporting. So for any of you non non reporting geeks, that is a digital reporting language that has been commonplace in financial reporting for a long time. But this is going to be, you know, the the first real, test of this, to to move towards a a digital reporting, and digitally consumed information, through through, company disclosures. So, that's a bit of the lay of the land in a in a short 12 minutes. So, what we're going to do now is, it's a little bit of a test of everything that we just discussed. No. Where are you in your CSCRD journey? I'm just a bit curious from from our audience. We had, when I was looking yesterday, we had some practitioners. We had, some consultants. We had, some other service providers. We had so, let's see, if we take a couple of minutes. And, hopefully, that's you see that and you're able to respond. So are you going to be reporting next year? Are you required to report, but, you know, already already working on it, but not not you're not gonna be reporting for a little while yet. You're still in procrastination mode. That's fine. Hopefully, we can we can get you out of that today. You're not required to report according to the CSRD, but you're still gonna do it because that's just best practice these days. You're not going to report according to CSRD, and you're just here for a good time. Hopefully, we can we can give that to you. And, and if you're already lost in the acronym soup that is, our world of ESG, then I I added my own little little acronym in there for you. I feel your pain. So let's see where we land here. And then Olga, I don't know. I'm not sure how I actually see these results. Is oh, there we go. Wasn't even shared. So that's that's a a lost some lost time in our conversation. My bad. New technology. So, let's see here. Alright. We had, about 53% of folks who were gonna be doing this. You're obligated. You're already working on it. That's great. Hopefully, we still have some some tips and tricks, that that you can leverage, as you're going through this process. About 12% who are obligated next year. Congratulations. That's a that's a big step, and I'm I'm sure that, we'd love to hear your questions as well as we go through this this conversation. Some here who who are just for, you know, along for the ride, again, welcome. And nobody is lost in the acronym soup, so that's already, a great start. Alright. Let's close out of this. Let's go there. And let's jump back in. Alright. Again, apologies for my, my my technical limitations here. So, to guide the conversation today with Katie and Jeremy, and this is, this is really, you know, where the rubber hits the road, and I'm I'm excited to to dive into this. I had a a fairly silly and and esoteric analogy that I wanted to run through here. So, this is this is like an episode of Bake Off. For those Americans, it's the great British British Bake Off. And, you know, it's my my my geeky, Netflix special that I love watching. And this is this is kind of the finale. You're in the tent. You've been it's it's like bread week. You know, it's a bread week finale. So you've been given this, this this task, and you have, you have some knowledge of what needs to be produced, but there's a lot that you need to figure out as well. So what what needs to be produced is according to the ESRS, the European Sustainability Reporting Standards. But, again, there's, there's a process that needs to be followed, and and there's a lot to consider as you run through this. And the first thing that you need to think about is, you know, this is the fun this this is the final. So you're gonna be cooking this delicious, bread concoction for the judges, but also for your fellow contestants, and and for for for their friends and family that have joined for this finale. So, you know, who's gonna be there? How many people? What's this going to look like? And, and in in our our kind of recipe for success, step 1 then is connect the dots internally, educate key stakeholders, and find collaboration opportunities. So with that, Katie, you are an ESG controller. Would love to hear a bit about first of all, what does that mean? How did how did you get here? You're one of those rare animals that exists, but but but we're seeing more of. And, and and how are you thinking about collaboration, at Wells Fargo? Thanks, Ian. Yeah. So glad to be here. I'm Katie Good. I'm the ESG controller at Wells Fargo, and it's a it's a little bit of an interesting story. I think each ESG controller probably has their own, and many like me, are not only new to this role, but the role itself is likely new to their organization. Because, like you said, it is sort of a rare animal, although becoming much more commonplace. From a personal professional background, I grew up in public accounting and had a lot of experience with audit, particularly with reporting and with public companies. And so when I came to Wells Fargo, my initial role was very heavy on SEC rules and regulations and on accounting policy. And and so, you know, I kind of naturally started to fall into this place given my, interest in rules and regulations and knowing that the SEC was coming out with the climate related disclosure rule. So long story short, you know, one thing led to another, and and here I am as ESG controller about 6 months into the role. And I would say collaboration is actually the name of the game for me. It's been an interesting 6 months and that I feel like I meet someone new every single day within the Wells Fargo Organization and and externally as well because there's just so much going on in this space. And if if we think about educating key stakeholders, you know, I myself first joined, this journey by learning a lot about ESG because I have a lot of experience with rules and understanding how to read a rule, how to implement a rule, but I didn't have a clue what greenhouse gas emissions were. And so I think it's been a lot of that two way collaboration and education strategy. Once I've been in, you know, the ESG space for about a year and before I was the ESG controller, I kind of got on what I call a roadshow, where I found myself going around to various finance organizations, and educating people on, you know, what are these rules that are coming up? And and you're hearing a lot of talk about climate and sustainability. And and what does that really mean, and what does it mean for us in finance? Finance understands rules. They understand controls, but I had to teach a lot about, you know, what are greenhouse gas emissions? What does it mean when we say double materiality, and how does this all benefit together? And on the other side of the house, I found myself having this roadshow also with our sustainability teams and our business groups, because they understand a lot about sustainability, but they didn't understand the ins and outs of some of these rules and to some extent, the rigor that would be required, you know, to bring sustainability reporting into a really controlled environment, before we started reporting out. So, again, a lot of my role is collaboration. It's working with all the stakeholders to make sure that we're all on the same page and that we're working as efficiently and effectively as possible to implement new reporting standards and to take that up to the broader, you know, enterprise view and think about how we can work together to do things in a really efficient way. Right? Like, it's not just reporting. It's telling our story. What do we do and how do we plan this space? It's it's been really fun. And, Jeremy, global head of sustainability at AICPA, CEMA, former ISSB. So I'm sure you have a lot of, interesting war stories as well. You know, what what are you guys doing to help help to build that bridge, and I guess educate finance people on on ESG, and then also, you know, work to increasingly educate the ESG people on on finance to to help facilitate this collaboration? Thanks, Ian, and thanks so much for inviting me to participate in today's webinar. So just to respond briefly to what Katie has said, I think what's really interesting, and and this is, for whatever reason, seems to be a particular feature of the US corporate environment. ESG controllerships, have I think KT is your words, have mushroomed, and I've I've seen in the last 12 to 18 months, and I've seen others, describe the growth of the ESG controller in similar terms. So this is a very recent, role that's emerged particularly in the US context. So AICPA, is the American Institute of CPAs. So the, the the emergence of this new role is a particular interest, to us on on on the US side, of the organization. CIMA is the Trust Institute of Management Accountants. That has a slightly different demographic because management accountants tend to work in business and industry, with job titles such as business partner. And they're involved within with the the rather messy, sides, of, how to apply financial and insight primarily to decision making, and resource allocation. So although management accountants, will have some understanding and knowledge, of the sorts of rules and regulations that Katie was talking about, actually, the bread and butter of of of how a management's company goes about doing business is really the application of frameworks and principles and methodological approaches to help organisations understand how best to allocate resources more broadly. And I I think what we see in a management accounting environment is, a broadening of the definition of resources away from an exclusive focus or a primary focus on financial capital, which I think would be a a fair means of characterising what the profession was like when I first started working in it, just over, 20 years ago, to one in which, accountants working in business and industry are expected to understand the very complex interactions, that there are between all of the resources and relationships that are relevant to a business's business model. So that might involve natural capital. It will certainly involve human capital. It will invariably involve social and relationship capital. And these are the types of capitals that, one hears about, in the context of of ESRS and and other, standards. So it's quite a complicated, ecosystem. We're the world's largest accountancy institute, and it's beholden on us, both in serving the public interest, but also in supporting our members, that they have the professional skills, in order to fulfill, their jobs, whether that's somebody who's stepping into an ESG controller role, such as Katie has recently done at at Wells Fargo, or as a management accountant, working in business and industry, and needing to understand, how to think differently about, resource allocation. And this is really important in in terms of there's there's a widespread recognition, across the profession that there is an an urgent need to build capacity within the system, both from, it's really from 3 angles, from a report preparation perspective, as Katie has talked about, from an audit and assurance perspective, so from public practice, and then from a a a the percentage of accountants working in business and industry. And this is something that all, accountancy institutes everywhere in the world, are needing to work through. As I said, because we are the world's largest accountancy institute, it's it's beholden on us to respond, at at scale, at speed, with that. So, the the primary thing, that we've done, which I'm I'm so particularly pleased that we've been able to do this. We we formed a a formal partnership with Said Business School at the University of Oxford. And, we launched a year ago, an online, ESG and sustainable financial strategy course, which is aimed specifically at the needs, of finance and accounting professionals. Primarily, those in leadership positions, so financial controllers, chief accountants, FDs, CFOs, etcetera. But the aim of this, course is to provide them with the skills they need to provide help them create a an international network, and to do so in a in a relatively, compact way. So the the course runs for 6 weeks. We've run it 4 times already. It runs once a quarter. The next cohort, starts in October. And it's had exceptionally good feedback. So that's one of the tangible things, amongst many, that we've been doing to help build that capacity, and capability within the profession. Great. Thank you, Jeremy. So I'm gonna I'm gonna pause there on collaboration so we can look at step 2 of our recipe. So we we know how many people are are going to be we we need to feed here with our our lovely bread concoction, but we need to know about dietary restrictions. We need to know about, you know, what what are the flavors that they love, and, and how how are we going to get the best quality ingredients and and make this as meaningful as possible so so that, obviously, when we win our our great, bake off, challenge here. So what we're going to talk about for step 2 is gathering the necessary buy in for outcomes to inform business strategy. And, Jeremy, I'd love to to to go back to you on this one. You know, you were talking about the the role of, of of the accounting profession. Now, you know, one of the big things that that I keep confronting is, how to move CSRD or or any of these, these these, quote, unquote, reporting requirements from being a a compliance exercise to informing meaningful outcomes and and changing business strategy and business model. So, how how are you seeing that, and how are you helping to facilitate that, that that thinking? Thanks, Ian. So I I think it's partly the mindset of how to approach, the reporting requirement. So for organizations that that see ESRS, for example, as as merely as a report or exclusive as a reporting requirement, is is going to create probably a a rather sort of, compliance led mindset. And I suspect the process, of working through the double materiality assessment or as you you said in your preamble, to identify, the material impacts, risks, and opportunities, is is likely to be a a quite a a a painful one if if that's the mindset, that that is applied. And we can then apply your your acronym of I feel your pain. However, there is, light, behind the storm clouds, and that relates to the business benefits, that come from the process of undertaking, the particularly the assessment of the material risks, impacts, and opportunities. Now there there's some really interesting research, which, has, been published over the summer by by FRAC. And it it's based on a relatively small sample. But what they did was they, interviewed organizations which are already well down the path, of responding, to the ESRS, to find out what what benefits they were seeing from doing it. And quite a number of, these organizations reported that it was really helping them to understand their business strategy. And and that, of course, is is one of the underlying drivers, with, FRAG, obviously, working on behalf of the EU, to have created, the standards. Yes. It's the ultimately, the information that's published, will support investor, decision making and provide other key stakeholders with the information that they may need, about a company's sustainability, impacts, risks, and opportunities. But in the process of of of, identifying that information, it's clear that organizations also have a deeper understanding of the execution and the challenges to that of their own strategy. So that's, I think, is is reassuring, that that evidence base is beginning to emerge. As I said, these were are they're large companies at the forefront, of, preparing for for ESRS, reporting, and it's a relatively limited, sample size. But I think it gives a a a foretaste of, to to carry on with the the food, metaphor, of of the benefits, that organizations, should experience, from this. So and perhaps this illustrates the the difference between the underlying, sort of rationale and philosophy that's this has driven European regulators, ultimately stemming from, the the the MEPs, as to why they want this information, available, and what it's trying to achieve, which, of course, is is supporting Europe's transition, towards net zero, and and the ambition for the for the, EU member states to be net 0 by 2050. So there is a much bigger thing, at play here from a European perspective. And I suspect that this illustrates that's a different mindset, a different understanding of the relationship between business and society that is, very much, central to to a European understanding of of business being an organic part of society. It's not sort of removed from it, which I think is a subtle difference, from, perhaps our, American regulators view the relationships in business and society. But, anyway, that might be something interest interesting for Katie. He's far more informed about these things, to pick up on. So Thank you, Jeremy. And and, Katie, with without getting too much into into into the raison d'etre of a of a of a corporation, you know, how how are you working to internalize this information as you're you're going through the CSRD process? They're you know, you're you're encountering these impacts, risks, and opportunities. How are you engaging with internal stakeholders to to to really drive that forward through existing governance structures that that you might have in place? Yeah. I think what Jeremy said really resonated with me. Anytime you dig into something, something new in particular for the first time, it might seem like a black box. Right? And and you think, how am I gonna get through this? You know, how do we get started on it? You know, and I think that's a struggle that a lot of organizations have come across with CSRD. But when you just put one foot in front of the other and start bringing together the right stakeholders, you might be surprised to find, to Jeremy's point, that your strategy already exists, that some processes already exist for thinking about this, that the business, right, has been working on things that are really relevant, who have already been driving value, and you start bringing those people together and learning about your own organization in a brand new way. And, really, it gives you an opportunity to look at those internal processes and internal strategy and think about it with a new lens and to have the same discussion with different sets of stakeholders. And it's you know, I think anytime you get that diverse set of perspectives together, it is almost guaranteed positive outcomes. And I think that's true, for CSRD especially. You know, getting the right governance engaged and starting to educate them has been a really big step, and it's really important to get that buy in. But it's a lot easier, in my opinion, when you've already got the right people at the table and you're already able to say, hey. We've thought about how we do this right now. How different does it need to be, if at all. Right? And, you know, here's the people we've already brought to the table and what we've learned, and it's a much easier discussion at that point to get, you know, in particular governance structures to understand what the pathway needs to look like and that it's not going to be an insurmountable task. Yes. It is reporting, and that can, you know, seem a little mundane, but but it's really telling your story. Again, I think I've I've said that before, but I I think reporting, can be a lot about storytelling, in a very factual and controlled way. But but, nonetheless, it doesn't have to just be, you know, putting numbers and and small facts on a page. And I I think that also, again, helps when you're talking about the resources and time commitments that are needed in order to be able to meet our reporting obligations. But, again, going back to what Jeremy said, doing it in a way that, you know, creates value is really important. Amazing. And I I think, Katie, that's a really helpful point because I think one quality that that finance and accounting professionals are really good at, is working with colleagues from other parts of the business. Because especially if you work in business and industry, you might be supporting, I don't know, the the supply chain or factory production, or you might be working to working with the marketing team, or you might be working with the sales team. So any any finance professional who works in business and industry is used to how to work with colleagues in other parts of the business to gain the necessary buy in for whatever it is they're trying to achieve. So at at one level, this is asking finance and accounting professionals to do what they're already very good at doing, which is to work with colleagues from elsewhere within the business in a in a multidisciplinary way, which I think is is part of the challenge of this, is there's no one profession that can, by itself, create the information that's required in in this context by regulators. It's it's finance teams as, Casey, as you've said, it's finance teams bringing their approach to to, reporting discipline and the controls that might sit behind that data and an objective view of whether the data itself, is material for the purposes of decision making. But working with colleagues who may have produced the data itself, if it's, for example, greenhouse gas emissions as as you mentioned or it's water used or it's waste, those are likely to have come anyway from other parts of the business. But I I often think finance accounting professionals as sort of the the chief translators within a business. Because we have to be able to translate information from all sorts of other parts of the business and understand what that might mean from a financial performance or prospects, perspective. So I I think this is this is a great opportunity for for finance folk to, to to expand, to expand into this new newly emerging area of of sustained risk accounting. A core skill that would have been honed, particularly for for anybody who might be leading this process. They'll they'll probably have dozen plus years experience already. So I I think that's a great opportunity for for the profession. Thank you both. And I think that segues very nicely into, our 3rd step of of our 5 step recipe for success, which is, start early with an audit ready mindset. So you're not gonna go into the finale of bake off without having practiced this before. Right? And and when you when you go in, you need to make sure the oven set is at the right temperature. You have everything lined up that you need. That everything is, is going to go according to the plan that you've you've practiced and established. So, Katie, I in our short conversations together, the one thing I know about you is you love rules. So, you know, how what does what does audit ready mean to you? And, and and how are you helping to reinforce that at Wells Fargo? Yeah. And I think this would be really relevant given the outcome of the poll that we took earlier. It said that most people had already started working on this obligation. And so what is very important is to start writing everything down because as a auditor in my past life for a very long time, nothing is more important than documentation, documentation, documentation. This is a brand new process. Most of us are doing it for the first time, and it's going to be very important to write down things like what are the key decisions that we are making along the way. If we're having conversations about what our value chain is and you've made an important point about where it starts and where it ends, that needs to be written down. With any kind of new rule, there's certainly a lot of interpretive, guidance that's available, but there's a lot of questions out there as well in terms of how do I think about and apply this particular component? If you need to make an interpretive decision to move forward, write it down. If you're collecting evidence to support the decisions you're making, put it in one spot. And in particular, it's an iterative process. Right, Ian? So if we go back to the baking show, I think people do the best when they're baking something they're familiar with. They've done it before. And in this instance, I would say get it through your governance process frequently. Have lots of check ins. Make sure that the governing body, the decision makers in your company that ultimately have to sign off on this process and on these disclosures are with you along the way and understand not only the decisions and assumptions that you're making, but that they agree with it and that they understand, I'll call them, the risks or uncertainties as well. As we know, FRAG still is going to put forth or is expected to put forth additional guidance. We haven't seen full rules yet on no group only reporting. So there's a lot that's out there, and I know what helps us in particular is getting a lot of documentation done so that when an auditor comes back, whether it's in, you know, 6 weeks or 6 months or a year down the road, it's really evident that we have gone through a very well thought out process and that we have documented our discussions that we've had to get to our conclusions and who we've talked about with along the way. I think that is, you know, absolutely critical. Thank you so much for sharing those perspectives. Jeremy, I I would I would love to talk about Experial. Now, Efrag just released its its XBRL taxonomy for the CSRD. I I personally worked, in the you know, this was back in 2012 on the the GRI g 3.1 Experial taxonomy. And, and and at the time, it was a bit of a flop because, 1, there there wasn't a business need, and, 2, sustainability people had no idea what what XBL was or what to do with it or how to go about this. It was just confusing. So so the the need is now there, but I think that there's there's probably still a skills gap outside of, outside the the financial arm of of of companies. So, what do you what do you think about digital reporting and and kind of, the role of finance in in helping to to to bring this along for, the consumers of information? Yeah. So so just to to sort of tell a very simple story with with what XPRL is, it's a form of digital tagging, and it's, a a standardized approach. So the same, set of information gets tagged in the same way, whether it's company a or company b or company c, that is publishing information. It's, XBRL, my understanding is that as, companies prepare the reports, they tag the information themselves. So it's it's it's done at the source. And then that's in that that tagging carries through to when, for example, the financial accounts or the sustainability related financial accounts, are published. The consumer here is primarily the investor. And, if if anybody on this webinar has listened to, investors talk about the challenges they have with with accessing reliable information. One of the most frustrating things from an investor perspective, is, the the difficulty of getting hold of the same, information that's been prepared in exactly the same way by different companies so they can compare like with like. Now, obviously, ESRS, and also, in as you mentioned at the beginning, the I double s b standards, s 1 and s 2, will standardize a lot of that. And XBRL, will bring another layer of discipline so that there is absolute comparability of information piece a with information piece, be created by another, organization. So, the EU, has published its draft taxonomy. The IWSB has also published its draft taxonomy. It's obviously important these taxonomies, are are, have the same foundations, to them. So there isn't sort of marginal differences, between, between different taxonomies. So that that's what it's for. The end user is the is primarily the investor. I have seen demonstrations of of how to tag something, and it looks pretty straightforward. I don't think it's going to challenge financial reporting teams or sustainability related financial reporting teams, to do it. What it will bring is is is that additional layer, of discipline, and, it it will finesse the the actual the actual data, so not the the narrative around it. This is, you know, it it it let's say, scope 3 greenhouse gas emissions. It it would simply be that bit of data that is tagged, not the accompanying narrative. So I I think, finance, folk will will find it sort of relatively straightforward to understand how to do it. I think it'll be intuitive as to why, XBRL is helpful from, from an investor perspective. And over time, I think that will really help with the, the the dialogue, the conversation between, investor relations, and investors, in a company because it'll be crystal clear what information the investors want, for through the the XBRL, tagging. So, I I hope that I hope that helps, Iain. But before I before I, pass pass the baton back, I I just want to to to respond to the to the audit ready mindset and and a thought that came into my head when when Katie was speaking. One of the, again, I think one of the advantages of having appropriate governance in stake, in the context of of, reporting against the ESRS, is the engagement and the interaction with the audit committee. The audit committee obviously has the, primarily the relationship with, the external auditor, quite likely, in the future with the external assurance provider as well, particularly as that becomes, mandatory, and there's the move from from limited to reasonable assurance. But I think that, there's something very special in that relationship because within one committee, you have, the, the chair of the audit committee, you have the CFO, and you have the chief auditor. You got 3 very powerful and influential people who will be meeting, obviously, there will have been doing this for many years in the context of the financial audit. But increasingly, I would anticipate that they will be doing this in the context of the sustainability related financial information. And I think having the eagle eyes of the chair of the audit committee, the CFO, and the external auditor around the information that's being published and perhaps the greatest challenge of all, how effectively that's being connected with the financial information in the context of what does this information tell us about an organization's performance and prospects will be very valuable in terms of that internal dialogue on how that will help feedback, hopefully, through a positive feedback loop, into the CFO and the CFO's teams and all of the stakeholders they interact with internally, their understanding of how an organization's management of sustainability related impacts, risks, and opportunities is contributing to business success. Thank you so much for for that, additional flavor. So, on the flavor note, we're going to continue on with our our little analogy here. And I think in the in the interest of time, I'm gonna I'm gonna take this one and then save save some some more meat and potatoes, for for the last step of our recipe. So, this one is about the tools. Right? So you need to make sure in addition to having the right ingredients, they're the right quality. You need to you need to have the right tools to to bake your delicious bread. And, what that means is, what are the the the tools and systems that you need that will facilitate value realization through this process? And as a software as a service provider ourselves, we think about an ESG tech stack. So in reality, there is no silver bullet solution. I'm really sorry to break it to everybody on this call. But but the idea of a of a one stop shop, kind of, panacea software, at this point in time, that does not exist for for ESG and probably never will. And, you know, it's it's similar in a in the finance organization or in the or in the marketing organization. There is an existence of a tech stack where different softwares and different tools work together, to to help to deliver that that end value. So it really begins with an understanding of what are my needs, you know, what what where are the biggest pain points for me in this process, what do I need to to to get to the other side, and how do I ensure that that information adds value to to the process that I'm going through. And, once you have that understanding of needs is when you can go out and and think about, you know, the the tools and and systems necessary. Spreadsheets aren't gonna cut it anymore, folks. Back back to the audit ready mindset, very hard to to put meaningful controls on spreadsheets, very hard to keep track of kind of what's going on. And, and certainly, you bring that to an enterprise level, and it just becomes absolute mayhem. So, thinking about about those those needs and and the tooling necessary, I think, is a a key step in our recipe as well. And the final step is, you need to taste along the way. Right? Too much salt, too little salt. We need some more pepper. We need some oregano. This is a this is a process. It's a journey. And, and, you know, this is this is not kind of a a one and done exercise as we also talked talked about earlier. Needs to be double materiality needs to be considered at least on an annual basis. If not, you know, in a more ongoing, governance oriented process. And, what we're talking about here is then ongoing monitoring and iterative improvements for informed decision making and figuring out how to drive that value creation. So, Katie, you know, there's there's going to be new sustainability related information coming out of this process, and and new insights that need to need to inform those decision making processes that you have. How how have you been thinking about that, and, and and how have you been kind of, lifting all that information up to to to the right people for that decision making process. I think that's a really good point. And as I I kind of put on this question earlier, the iterative nature is not just re performing a full double materiality assessment. If you can get through it perfectly the very first time you do it, well, then kudos to you because I think even getting through, a double materiality assessment is an iterative process and learning from it. I mean, I know what I've seen, Ian, is that, again, is is you start to look into something in more detail. There's the answer, I e, this is what a disclosure would look like right now. Right? And then there's the discussion that follows that when the business says, well, that's really interesting. Is that what we want? Right? Is there an opportunity here that we haven't touched on? Is there, you know, something new to think about? And I think the disclosure, as it was intended, has really sparked that conversation, in many different areas of an organization. I think you're gonna I think you're gonna see it grow as you bubble that up to the governance bodies, for them to think about again, going back to, you know, what is our story? Have we adequately laid it out here? Are there gaps? Right? Are there things that we want to to fill in? And I I think that's part of the iterative nature as well as as saying, you know, I've got the results of what I've done so far. Does it make sense? Does it tell my story? Do we need to go back and think about, you know, maybe where we missed something? Do we need to build another step into the process? And and that's that, in in my opinion, is what we're really seeing is driving that value, is the ability to, you know, continually think through it again and again, because I don't think it's I don't think it's 1 and done because you're gonna continue to get more out of it. You know, every time you hit a milestone and when you start to engage with different people. When you take it to that next step and say, well, here's what we've done. What do you think? You might be surprised at the answer you get back. So And, Jeremy, as the you know, I I guess a component of this is is also the the CFO beginning to engage with some of this new information and thinking about, that value creation component slightly differently than than perhaps they did previously. You know, what are some of the the the learnings, or, or or what are you seeing in the market from from that perspective of, you know, new folks be getting involved with with this new information and and figuring figuring this out on the journey that that they're on. Ed, well, thanks. It it's interesting to see the the reemergence of, the job site with the chief value officer. This is something that that surfaced during COVID, through a, an IFAC report. And, I've I've seen references to it again recently. And whether, you know, whether the term actually takes off or not is is kind of beside the point because I think the the the key thing about this is is CFO's thinking about value creation more broadly than than, only the financial value creation as, distilled into, the the balance sheet or the the profit and loss account, etcetera. And and that's where I I think there is the opportunity to add a lot of value, through this process as as Katie's been talking about, bringing all of that that discipline to the reporting against these material, impacts, risks, and opportunities within a context of what that means for the business model, and how the organization is is creating or maintaining or eroding value as the case may be through its activities, through its operations, through its products and services. So I I think that that's an area where this process has has the opportunity to really help the the CFO and the CFO's team to work that through, not as an abstract or choose exercise in how value is created, by the organization, but within the context of increasingly rigorous, reporting. And I I again, as as I said at the beginning, I think that finance accounting professionals have the right, background to be able to translate, the insights that come from this reporting into what it means for the business, and for, for for the creation of value over time, through the business model. And things like the appropriate tech stack are are, things along the way to help the CFO, with and the CFO's team, with having confidence in the reliability of the data. I I was heartened actually, it was a couple of years back now to hear that a a very large international company, was beginning to use carbon reporting for internal management reporting, and, was able to create this data once a month. Now that that's the same, cadence of of data that that the finance are used to seeing in the context of finance financial data. So I I think as we we get closer to that point where, information that's systemically related and of business relevance is available for management reporting as much as for the set piece once a year external report, that will really help, I I think, CFOs hone the advice they can provide the business, the insights they can provide, around, how to pivot the the the the business model towards, towards value creation over time. Excellent. So that, that brings us to to the end of our recipe. Hopefully, at the end, you have a delicious, prize winning bread, full of full of all the the lovely flavors that that we've discussed. I would like to, to ask, Jeremy, Katie, can we can we give, like, a quick 32nd, you know, what is what is the key takeaway? What's the key piece of advice, you wanna give our audience before we before we wrap up? And, Katie, let's let's start with you. I've got a good one for you, Ian, because it's gonna follow this theme. Grandma's recipe didn't get handed down from generation to generation without someone writing it down. Right? We all want that recipe that we can bring to the next picnic, the next family gathering, and it's very nuanced sometimes. And sometimes you have to tweak it, but you can't adequately do that unless you're writing it down. So in my mind, the takeaway is this is a long and complex process. You'll need iterations, but please write what you're doing down and get those key decisions documented, so that you can use them and revisit them in a meaningful way. Love it. And thank thank you for continuing the the esoteric, analogy that we were using. Jeremy. So I'm I'm going to continue the metaphor as well. I'm an amateur bread baker. I'm going to share the advice that I give my children when they when they cook. All form of cooking is a form of experimentation. You never know from batch to batch what's going to work well and what's going to not work. But if you don't, put the bread in the oven, you're never gonna know because you weren't given it a try. So the metaphor there, the parallel there, I think, in the context of CSRS is, this is going to be an iterative process. And each time a company, creates and identifies the information, to publish against standards, it is going to be a bit of an experimentation, and that will probably last through several reporting cycles. But that's okay, because, ultimately, the bread, will rise better, and in a more predictable way. And, ultimately, hopefully, you'll end up with, great tasting bread, which is utterly predictable, which ultimately is what one wants as a baker. And I think the same is here in the context of ESRS that that through, experimental iteration year after year, the quality of the disclosures will get better. And, the the needs of stakeholders, whether that's investors or it's broader stakeholders in the context of PSRS, will be met, more closely each year. So so keep going. Don't give up. But if you do nothing, you're guaranteed not to have anything to eat. Love it. Doctor Jeremy Osborne, Katie Goodes, thank you both so much for joining us. One last plug from my side. We have a fantastic event lined up during climate week, Tuesday, September 24th. It's at the iconic Guggenheim. If you are going to be in New York City for Climate Week, look us up. You can sign up on our website, datarand.com. Again, thank you both so much for this wonderful and timely discussion. Thank you all for joining, and, hope you have a wonderful rest of the day.