- February 23, 2021
- Posted by: Sundeep Mehta
- Category: Uncategorized
What is ESG reporting?
ESG reporting is the disclosure of data explaining a business’s impact and added value in three areas: environment, social and corporate governance. Just as a company would produce financial reports, ESG or sustainability reports provide a summary of quantitative and qualitative disclosures supported by analysis of performance across these ESG factors.
Examples of these factors:
- Environment: Climate change and carbon emissions, air and water quality, biodiversity, deforestation, energy efficiency, waste management
- Social: Customer satisfaction, data protection and privacy, gender and diversity, employee engagement, community relations, human rights, labor standards
- Governance: Board composition, audit committee structure, bribery and corruption, executive compensation, lobbying, political contributions, whistleblower programs
Many companies chose to integrate their ESG reporting in their annual reporting to demonstrate how sustainability is embedded in their business; however, there is a gap between demand for ESG information and supply. Investors especially, want more financially material and higher quality information to inform their decisions. This gap is driven by several factors including, non-mandatory reporting regimes, a range of ESG reporting standards and frameworks and costs to collect and report data.
How to report ESG information:
Reporting ESG information with your financial results can benefit your company by presenting a sustainability story that is aligned to business strategy and financial performance.
To start reporting your ESG data you need to:
- Identify the range of stakeholders impacted by and impacting your company
- Map your material sustainability issues inside and outside your business to relevant; stakeholder groups, e.g., emissions, supply chain human rights, gender diversity
- Understand the relative importance of issues to your stakeholder groups and how best to report progress to them
- Formulate your ESG management framework including: focus ESG issues, performance metrics, targets, initiatives and internal and external reporting standards and frameworks
- Mobilize the internal resources, teams and data required to meet the needs of your intended reporting and bring them on the reporting journey
- Communicate externally how your ESG management framework and reporting reflects your material issues and aligns with your business strategy
- Report your ESG performance using your ESG management framework and continually improve it by engaging with stakeholders and understanding emerging sustainability issues affecting your business.