A guide to ESG reporting
Here’s a guide to get you started in environmental, social, and governance reporting, an essential topic in today’s boardroom. Expand your knowledge even further with a dedicated ESG reporting certificate. More info here.
What is ESG reporting?
An ESG report provides information about an organisation’s environmental, social, and governance (ESG) impacts. The report is a communication tool to convince people and stakeholders that the company’s actions are sincere.
One of the challenges of ESG reporting is the level of comfort and knowledge your management and board may have with the metrics involved.
Read more: 80% of large firms doubt the accuracy of their ESG reporting
ESG reporting is important but doesn’t sync up easily with traditional financial reporting. Without that familiarity, your organisation’s ability to build a competitive ESG advantage could be in jeopardy.
Ultimately, your company and its board needs to understand the implications and metrics of environmental footprints, greenhouse gas emissions, and water management. You may also need to delve into diversity, modern slavery, and wage equity.
Whatever ESG topics you’re involved with, you must be able to understand, collect data, control, and verify third-party practices.
The ‘carrot and stick’ of ESG reporting?
We can encourage good ESG reporting using the “carrot and stick” method. In other words, “this is your reward if you do well, and this is your punishment if you don’t.”
- Your investors have probably already embraced your ESG initiatives, believing that the returns will outweigh any drawbacks.
- You’ll likely be less reliant on raw materials and volatile energy prices.
- Still, more importantly, more of your workforce and customers will be inspired by their association with a purpose-driven organisation.
- ESG is no longer a personal preference. It’s a necessary, sometimes even mandatory, requirement that you need to follow.
- Consumers are less willing to work with companies that don’t embrace ESG.
- Even your employees and shareholders may demand engagement with an ESG strategy dedicated to making the world a better place.
- The make-up of your board and the election of certain members may be predicated upon strong ESG engagement and reporting.
Your board needs to appreciate both sides of this concept to form a well-rounded approach.
Read more: How to stop greenwashing. The EU makes ESG reporting as important as financial reporting
How to educate your company and your board on ESG reporting
The good news is that ESG issues are now more mainstream. So, you don’t have to look far to find resources that will inform your ESG strategy and reporting initiatives. Here are just a few ways to get started.
Gain fluency in ESG
Your company’s management and its board members should gain knowledge about ESG issues and reporting, and your team can also support these efforts with training programs such as the Diploma in ESG.
Read more: The world’s first University accredited Diploma in ESG
Determine consensus on your ESG strategy
Your board needs to align your approach with senior management. When it comes to ESG, everyone should be on the same page.
You also need to ensure that you’re moving in the right direction to meet ESG targets with actions that will collect data, give you the analysis, and report results.
Develop a compelling ESG story
Your efforts as a board, combined with your collaboration on the approach with your senior management, will create a compelling ESG story.
Map your sustainable efforts well, so you can demonstrate your contribution to a brighter future without being accused of “greenwashing”.
Developing that message means remaining dedicated to collecting data, analysing it thoroughly, and documenting results. Make stakeholders realise that your commitment to ESG is legitimate.
Sync your reporting with future goals
Have clear goals in place as you report on ESG efforts.
Whether you’re aiming for success in human rights, emissions reductions, water management, and beyond, your plan should showcase every step your company will take to achieve those aims.
Do you want to become an ESG leader?
As you embrace the importance and value of ESG, you’ll better understand how to oversee and report on the metrics of building a more sustainable world.
Can we help? You can take the Diploma in ESG (download the course brochure below) and become the ESG expert in your organisation.