Ernst & Young report: 96% of financial executives are worried that non-financial data is unreliable, and AI may be the key to solving it

According to the 2024 Ernst & Young Global Corporate Reporting Survey, financial leaders around the world are facing challenges with the integrity and reliability of non-financial data in company reporting. A whopping 96% of finance leaders are concerned that non-financial data in their organization is not suitable for decision-making, citing data formats (39%) and data inconsistencies (35%) as major issues.

Half of the finance executives surveyed are concerned that their organizations will miss out on key sustainability goals in the coming years. Only 47% of financial leaders and 53% of investors believe that most companies are on track to achieve their goals. Concern about non-financial value drivers continues to rise, with 69% of finance executives saying investor attention and inquiries about these issues have increased compared to two years ago.

“This is a turbulent time for all business leaders, and finance leaders are no exception,” said Myles Corson, EY global and Americas strategy and markets leader and head of financial accounting advisory services. “Guiding an organization through short-term volatility while stabilizing long-term growth relies heavily on finance’s effective use of data to map future plans and prospects. However, it is clear that the CFO and investor community have deep concerns about data transparency and non-financial information that they cannot ignore.”

Expectations for new reporting standards

Investors expect new reporting standards to improve sustainability disclosures, with 78% of investors believing the new regulations could have a positive impact. However, more than half of finance leaders (55%) believe these costs may be too burdensome, and 44% believe meeting the new rules will be very complex.

“Finance leaders’ concerns about companies meeting key targets underscore the importance of building trust in sustainability reporting,” said Nicolas Lecoq, EY global financial accounting advisory services leader. “Customers, shareholders, regulators and investors are increasingly holding companies accountable for their environmental impact and commitment to sustainable practices. This means the integrity of corporate reporting is more important than ever – it reflects an organization’s commitment to sustainability goals and can directly impact the trust of investors and the public at large.”

The potential of AI in reporting

Among these concerns, more than half of investors (57%) believe AI can help assess the credibility and accuracy of financial and non-financial disclosures. In addition, 52% believe that AI can evaluate alternative data, and 51% believe that AI can help detect inconsistencies in company disclosures.

While 43% of finance leaders are optimistic about using AI in corporate reporting, 29% are waiting for a deeper understanding of the risks before adopting it. Concerns about cost (39%) and compliance with AI-related rules and regulations (36%) remain. Only 32% said their organization has advanced technology to manage and analyze data.