Navigating the New Accountability Era

The integration of ESG metrics into corporate disclosures is undergoing a fundamental shift, moving from voluntary sustainability narratives to a mandatory framework with rigor comparable to financial controls. This change is driven by regulatory catalysts in both formats across Europe and the United States, creating parallel paths toward standardized, auditable non-financial reporting. 

In the European Union, the Corporate Sustainability Reporting Directive (CSRD) creates a broad system that requires over 50,000 companies to carry out Double Materiality Assessments (DMAs)—considering both financial risks and environmental/social impacts. This framework demands detailed disclosures aligned with the EU Taxonomy, requiring businesses to track sustainability-related expenses (CapEx/OpEx) through their financial systems. Importantly, it introduces phased assurance requirements, starting with limited assurance and progressing toward reasonable assurance, drawing clear parallels to financial audit procedures.

Across the Atlantic, the U.S. Securities and Exchange Commission’s climate disclosure rules focus on investor-relevant materiality, requiring registrants to report Scope 1 and 2 greenhouse gas emissions with limited assurance. California’s SB 253 and SB 261 laws further broaden this landscape, mandating Scope 3 emissions reporting for major companies in the state by 2027.

This could potentially establish a national standard, compelling organizations to develop controls for complex value chain data collection. The similarities between these regulations lie in their shared emphasis on third-party verification, executive responsibility, and structured data management.

The challenge is a moving target. Multiple frameworks now coexist and the ISSB’s FRS S1/S2 are becoming a global reference set (with TCFD’s work folded into ISSB).
 

This recent wave of complex regulated reporting frameworks necessitates operational frameworks. Organizations must now design and document control environments for ESG data lineage, moving beyond qualitative storytelling to quantitative traceability. This requires mapping emissions factors, social metrics (e.g., pay equity calculations), and governance indicators to source systems while establishing clear ownership protocols between sustainability, finance, and operational teams. Internal controls over data collection, processing, and reporting have become essential, particularly for Scope 3 emissions, where methodologies remain fragmented. As a result, several challenges arise:

• Data quality scrutiny: data that is not only accurate and complete but also auditable, traceable, and aligned with frameworks
• Fragmented systems: many organizations still rely on siloed data systems, spreadsheets, and manual processes, making consolidation and assurance difficult.
• Immature controls: lack of standardized, repeatable processes for sustainability reporting, something financial reporting has had decades to mature into.

The challenges extend beyond compliance mechanics. Finance and sustainability teams must reconcile divergent lexicons – EBITDA statements and balance sheets versus impact metrics and stakeholder engagement outcomes. This demands collaborative governance models where chief financial officers validate ESG disclosures with the same diligence applied to financial statements.

An ESG controller is the finance-side owner of sustainability information: they design the internal controls and put governance processes in place to turn dispersed ESG data into auditable, decision-useful disclosures, and they coordinate reporting across the enterprise with the same rigor applied to financial statements. 

ESG controllership succeeds when policy fluency meets finance discipline, so ESG data is reliable, comparable, and ready for assurance in a fast-moving rule set. To effectively succeed, the controller should take the following steps:

1. Map obligations and dates across different frameworks, and state laws into a phased, risk-based roadmap owned by finance, so resources target the highest-exposure items first.
2. Set up internal controls over sustainability reporting using COSO—define metric owners, evidence, control activities, monitoring, and retention, so figures are traceable and assurance-ready.
3. Industrialize data: centralize sources, connect systems, and document estimation methods (especially Scope 3); this directly addresses identified bottlenecks.
4. Plan for assurance early by aligning procedures with internationally recognized assurance frameworks and running “mock-close” cycles to test controls and audit trails.
5. Digitize the workflow to cut manual work and improve consistency.

Most organizations will benefit from outside help for ESG controllership that is compliant, audit-ready, and scalable. The remit has shifted from compiling a narrative to building an auditable system of record, and many teams hit three walls at once: capacity (resourcing constraints), know-how, and time. Surveys consistently show that collecting CSRD-grade data and adapting processes to new rules are the biggest pain points—clear signs of fragmented systems and immature controls.

Where external partners add the most value is turning policy into process. They translate multi-regime requirements into a phased, risk-based roadmap; facilitate double-materiality and gap assessments; and design internal control over sustainability reporting so metrics are owned, evidenced, and testable. They can also help industrialize the data stack—harmonizing sources, documenting Scope 3 methods, mapping master data, and building end-to-end audit trails—then pressure-test it with “mock-close” sprints aligned to emerging assurance standards.

Could this all be done in-house? Eventually, yes. Nonetheless, the fastest, lowest-risk path is a hybrid approach: bringing in specialists for setup—scoping, data architecture, controls, and assurance readiness—while in-house teams own steady-state operations.

Sia recognizes that navigating this convergence requires more than regulatory interpretation; it demands operational transformation. We support clients through integrated advisory services combining sustainability expertise with financial control architecture.