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Corporate changes seem to quicken their pace year after year, and sustainability concerns are keeping pace — setting the pace, some would argue. The 2023 EY Tax Finance Operations Survey shows 47% of executives indicated that green or sustainability taxes will have a significant impact on the organization’s tax and finance function.¹
Given that tax rules are at the heart of many ESG regimes, it’s no surprise that ESG reporting faces a similar data dilemma.
Increasing tax and ESG data — increasing demands
With rapid advances in generative AI, the tax and ESG reporting space can expect some efficiencies from the latest technology. However, generative AI models are only as good as the underlying data sets that feed them, so as organizations look to comply with the latest ESG requirements, and the world urges transparency in reporting, we may be facing one of the greatest data challenges of our time.
Correctly addressing ESG requirements hinges on data. Having plenty of it won’t help — having the right data will. It has to be accurate and relevant to the myriad global regulations that vary, but are nevertheless present, across every sector and industry.
With information everywhere, how can you find what’s really needed?
Amid concerns and complexities surrounding ESG compliance, there’s one bright spot: most of the data you need for reporting is data you already have. And that data probably sits partly (or wholly) within your tax department.
Having that tax data in house, the question for ESG data becomes, “How do you find it and apply it?” Reusing tax data to meet ESG requirements requires the right technology and the right team.
This is a challenge that the EY and Microsoft Tax Alliance is familiar with. In fact, our experience shows that you can address this challenge by starting exactly where you are. Imagine if you had to look no further for your ESG data. We are working with Microsoft to ascertain the best way to reuse data sets from our proprietary data platforms (e.g., EY Fabric, EY Global Tax Platform and EY Mobility Pathway) across multiple regulatory reporting domains to save time and increase transparency for clients, all while confirming data stays secure and private.
Through the strategic alliance between EY and Microsoft, we are helping companies formulate a strategy to meet ESG reporting demands, as well as help them leverage their data to provide insights (past and future) to the business on how to build more sustainable, value-driven organizations.