The ESG Controller: What Corporate Leaders Need to Know About This Emerging Role

As major companies around the globe face looming mandatory environmental, social, and governance (ESG) disclosures, corporate leaders are learning they need a higher level of expertise on their teams to navigate the intricate reporting requirements. Enter the ESG controller.

“The role of the ESG controller is emerging as a vital leader in monitoring data governance in sustainability sectors,” says Jennifer Delfeld, senior manager of ESG data strategy for Medline Industries, a healthcare company headquartered in Northfield, Ill. that manufactures, distributes, and provides solutions for medical supplies. “ESG controllers are responsible for safeguarding and validating nonfinancial performance indicators, such as carbon emissions, that stakeholders expect now and in the future.”

Third Wave Leads the Charge

The rise of the ESG controller position is largely due to the evolution of sustainability practices. Reporting requirements for ESG and other sustainability metrics have evolved from a peripheral concern to a central business strategy, highlighting the need for a high-level approach to compiling data.

“We’re seeing the emergence of ESG controllers as we approach what we call the third wave of sustainability reporting,” says Anthony DeCandido, CPA, partner and co-leader of the sustainability service solutions practice at RSM US LLP, the leading provider of assurance, tax, and consulting services for the middle market.

DeCandido says the first wave of reporting was based on the corporate social responsibility (CSR) movement of the 1990s. This was largely a philanthropic endeavor in which businesses sought to showcase their acts of goodwill and community engagement, which were oftentimes detached from their core business operations. CSR activities included simple acts like donating goods and services to charities, sponsoring community events, and supporting nonprofits.

The second wave took place in the early 2000s and was marked by the transition from CSR to ESG reporting, aligning sustainability activities with overall corporate strategy. In this wave, investors and corporate boards began viewing sustainability as more than just a social and moral imperative—it became a fundamental role in risk management and value creation. This era saw ESG reporting frameworks take shape, including the Global Reporting Initiative, Sustainability Accounting Standards Board, and Task Force on Climate-Related Financial Disclosures.

Today, the third wave signals a shift from voluntary to mandatory reporting. While the European Union (EU) has led the way in ESG and sustainability regulations, the United States isn’t far behind with the Securities and Exchange Commission’s (SEC’s) proposed climate-related disclosure rules and California’s climate-related disclosure laws unfolding. These measures apply to both public and larger private companies and indicate the corporate world is entering a broader, more stringent regulatory environment.

“The pressure is mounting for companies to not only report but also demonstrate the tangible impacts of their sustainability initiatives. Therefore, ESG controllers are becoming critical players as corporations face increasing business risks if they fail to meet the requirements of these reporting frameworks,” DeCandido says. “The first two waves were largely driven by corporate sustainability departments, and these teams sometimes don’t apply the same rigor and technical backbone in all things compliance, risk assurance, and reporting.”

Increasing Data Confidence Since ESG data can come from many disconnected source systems, even from outside an organization, experts say it’s important for companies to understand that much of that data hasn’t been audited. As such, companies will need to build processes to ensure that reported ESG information is reliable.

In 2023, Deloitte published a survey of 3,000 professionals polled during a Deloitte Center for Controllership webcast, “Operationalizing ESG Reporting Readiness Through the Controllership Playbook.” Their responses revealed that less than half (45.7%) are confident in their organization’s ability to gather data and thoroughly report on ESG financial metrics for regulatory compliance purposes.

This is where ESG controllers can help. Deloitte advises that establishing an ESG controller role may help build more confidence and increase corporate comfort levels in reporting data. Deloitte’s survey found that 16.4% of the companies surveyed had hired an ESG controller in 2023. Three quarters of those companies (75.5%) reported a much higher level of confidence in their sustainability reporting.

“The role of an ESG controller is emerging as either an individual or a team of people,” says Dina Trainor, CPA, ESG controllership leader at Deloitte in Boston. “Establishing this role is one way to spearhead efforts and increase comfort levels in an era of regulatory uncertainty.”

What Skills Are Needed for This Role?

At the time of Deloitte’s survey, just 7.2% of the respondents reported planning to hire an ESG controller within a year. Trainor says this finding can be pointed to uncertainty.

“The fact that this role isn’t clearly defined yet can be exciting for some corporate leaders, yet daunting for others,” Trainor says. “I think some companies are enthusiastic about the opportunity to create this new controller position to suit their own specific needs, but the uncertainty of it gives others a bit of anxiety.”

She points out that the ESG controller isn’t a one-size-fits-all role for all companies, and corporate leaders will decide for themselves the ideal skill sets needed for their individual reporting models and corporate cultures.

“In general, project management skills, the ability to understand the sustainability and reporting landscape, knowing the controls, understanding the processes, and the capability of navigating through their organization to get buy-in from leadership are all important attributes of an effective ESG controller,” Trainor explains.

According to a review of corporate ESG controller positions listed on LinkedIn, the experience and skill sets companies are seeking in an ideal leader include:

• A degree in finance and accounting, with a CPA license preferred in some cases.
• Deep experience and expertise in developing processes and implementing internal controls.
• Strong understanding of ESG issues and willingness to keep up with the latest ESG guidelines and developments.
• A proven track record in managing and implementing multiple projects and consistently meeting deadlines. 
• Strong business acumen, communication, presentation, and interpersonal skills.
• Ability to be a team player and thrive in an environment that deals with heavy regulation.

Overall, the ESG controller is the key in any corporation’s sustainability toolbox, says Elizabeth Sloan, CPA, managing director in the ESG sustainability services practice at Grant Thornton LLP in Chicago: “The ESG controller is someone who’s there every single day, understands how to make reporting as efficient as possible, and can develop a strategy for how the company is going to stay up to speed with requirements and work with both internal and external providers to make that reporting complete. The companies that prioritize ESG reporting now will position themselves for success in this evolving landscape.”