ESG is on the rise – The integration of environmental, social and governance (ESG) criteria into corporate strategies is not only driving business development, but also creating new, specialised professional fields: Curtain up for ESG controllers! The demand for these professionals is growing slowly but steadily, reflecting the urgent need for companies to implement – and report on – sustainable practices.
Die neue Nachfrage nach ESG-Controllern
One of the main factors driving the demand for ESG controllers is the introduction of the Corporate Sustainability Reporting Directive (CSRD), which became active for the first companies on 1 January 2024. This new European Union directive obliges companies to prepare detailed and standardised ESG reports. A higher standard for sustainability reporting has been created here as part of the European Sustainability Reporting Standards (ESRS). This increases the need for professionals who are able to fulfil the complex requirements of CSRD and ensure that reporting complies with legal requirements. This is because ESG factors are now also integrated into risk management.
The difference to a CSO
In addition to the role of ESG controllers, other positions are also gaining in importance, in particular the Chief Sustainability Officer (CSO). The CSO is responsible for the development and implementation of a company's sustainability strategy. While the CSO sets the strategic goals, ESG controllers ensure that data is accurately collected, analysed and reported. This collaboration ensures that the company's sustainability strategy is implemented effectively and meets the requirements of the CSRD.
A PwC study on CSRD shows that companies that invest early in ESG controlling are better prepared for the increasing demands of ESG reporting and can gain a competitive advantage. ESG controllers not only play a central role in complying with regulations and improving transparency, but also send a clear signal to regulators, investors, talent and the market: "We take ESG seriously and we are aware of its full implications." This ultimately strengthens the trust of all stakeholders and, accordingly, the long-term sustainability of the company.
Given the combination of regulatory pressure and growing awareness of sustainability, it is clear that the demand for ESG controllers will continue to grow. Companies that invest in this key role will strengthen their position as sustainable and responsible brands in the marketplace.
What does an ESG controller do?
Now that we have recognised the increasing demand for ESG controllers, the question arises: What exactly does an ESG controller do? And how does this role differ from "traditional" controllers?
As we have already noted, ESG controllers are responsible for monitoring and reporting on a company's ESG performance. This means that they collect, analyse and translate ESG data into reports that are understandable and useful to both internal and external stakeholders. Unlike traditional controllers, who focus mainly on financial data, ESG controllers need to consider a broader range of information, including environmental factors, social impacts and governance aspects.
The key difference is therefore that ESG controllers also analyse non-financial data. This includes CO2 emissions, water consumption, labour conditions and diversity in the workforce. This variety of data sources requires a different approach to data collection and analysis.
The other difference is the objective. Traditional controllers work primarily to secure and improve the financial health of the organisation. ESG controllers, on the other hand, work primarily to promote the company's sustainability and social responsibility. They must ensure that the company complies with ESG guidelines and produces credible, transparent reports that meet the requirements of CSRD and other relevant regulations.
And last but not least, there is the link to risk management (more on this in the next article). ESG controlling is about integrating ESG factors into risk management in order to identify and assess potential risks. ESG controllers develop corresponding strategies to minimise these risks. After all, these factors ultimately have an impact on the valuation of a company.
Overall, ESG controllers ensure that they play a central role in supporting companies on the path to greater sustainability and social responsibility. They are the bridge between the strategic vision of the CSO or management and the practical implementation of ESG initiatives.
What is exciting about ESG controlling and what are the challenges?
Let's delve deeper into the fascination and challenges of this position. What makes ESG controlling so exciting and what hurdles need to be overcome?
One of the remarkable aspects of ESG controlling is the opportunity to contribute directly to a company's sustainability strategy. ESG controllers are at the forefront of assessing and improving a company's environmental, social and governance practices. This is because they help to drive positive change and promote sustainable business practices. This can be extremely fulfilling as their work has a direct impact on the company's sustainability performance and corporate social responsibility.
One of the biggest hurdles, besides the ever-changing regulatory landscape, is the complexity of data collection and analysis. ESG controllers must manage a variety of data sources and ensure that the data is accurate and consistent. This requires strong analytical skills and a deep understanding of ESG frameworks. Or as Matthew Sekol, ESG and Sustainability Officer at Microsoft describes it in his book "ESG Mindset", ESG controllers need to develop a holistic mindset that goes beyond traditional financial metrics and considers the long-term impact of business decisions.
In addition, the pressure is on to deliver results that are not only legally compliant, but also fulfil the expectations of investors and other stakeholders. This can be particularly challenging – as ESG initiatives take time to show visible results. ESG controllers need to be patient while thinking strategically to achieve long-term goals.
How organisations should act now
The ESG directive puts companies under pressure to act. The most obvious step is the proactive recruitment of ESG controllers. But they can also set the course for further developments.
According to Deloitte, organisations must also adapt their internal processes and systems to facilitate the integration of ESG criteria. Among other things, this means updating existing data management systems or implementing new technologies that improve the collection and analysis of ESG data. Care must be taken to ensure that systems are robust enough to fulfil the complex requirements of ESG reporting – in other words, a permanently high level of data quality is required.
As already mentioned, an additional aspect is the close cooperation between ESG controllers and other key persons in the company, such as the Chief Sustainability Officer and the Chief Financial Officer. This co-operation usually ensures that the integration of ESG objectives into the company's overall strategy meets with the least resistance. A coherent approach in which financial and non-financial objectives are pursued harmoniously is the best prerequisite for the successful and sustainable integration of ESG objectives into a company.
Conclusion
Since the ESG directive is active, it is not only regulators who are looking closely at it – but also investors, customers and potential new applicants for a company. ESG controllers play a central role in fulfilling and advancing sustainability goals. Companies that invest in ESG controlling and adapt their internal processes to the new requirements will be better positioned to meet the challenges of the future and be recognised as responsible brands in the market.
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