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The concept of sustainability is not a new one; yet with a range of stakeholders now calling for greater disclosure in this area, environmental, social and governance (ESG) reporting has become a major priority for organisations worldwide.  

The benefits of ESG reporting are far-reaching, not least since it is one of the most powerful ways for businesses to demonstrate that they are making good on the promises set out in their sustainability strategy.

That said, ESG reports can be tricky to compile. They require a balancing act between adhering to the terms of the reporting methodology being used; whilst also ensuring the information meets the needs of investors, regulators, consumers and all other interested parties. A challenge, yes, but not impossible.

In fact, you only have to look at PepsiCo as a prime example of ESG reporting being done well. Recently winning the best ESG reporting category at the Corporate Governance Awards, the company was touted as a ‘poster child’ for its dedication to disclosing valuable and accessible data to its diverse audience. 

Whilst ESG reporting has clearly become an effective practice in many businesses, in the spirit of ongoing improvement, here are some suggestions to build further trust in your commitment to sustainability and drive your market growth.

Simple steps to successful sustainability reporting

Consider the materiality issues that really matter to your business

The three pillars of ESG each comprise a myriad of prominent issues – from climate change and biodiversity to human capital, social opportunity, business ethics and tax transparency. However, not every issue that falls under the ESG umbrella will impact your strategy and bottom line. A ‘materiality map’ can be a useful way in which to visualise the most relevant ESG matters to your organisation, based on key materiality concerns and the priorities of your specific stakeholders.

Utilise recognised ESG reporting standards

Despite the current lack of a uniform global reporting framework - nor a consistent approach to ESG disclosures being mandated – deploying at least one ESG reporting framework can make life easier for investors who require common metrics to compare businesses performance. Depending on your jurisdiction, there are multiple standards to help you establish these measurements including The Sustainability Accounting Standards Board (SASB) and The Task Force on Climate-Related Financial Disclosures (TCFD)

Take a forward-looking view on ESG activity

Too often, companies focus solely on historical performance when it comes to ESG reporting. Not only does this provide a limited perspective but it also reduces confidence in the eyes of stakeholders that a company is considering its long-term resilience and impact on the world. By looking ahead, organisations can evidence a more comprehensive picture of their future commitments in line with their wider strategy and with global initiatives such as the 2030 emission reduction target; thus increasing their credibility.

Define the role of the C-suite in ESG oversight

Going back to our earlier example of PepsiCo, its latest sustainability report includes a letter from the chair and CEO which outlines the company’s ESG strategy, as well as a Q&A with PepsiCo’s chief sustainability officer. As an increasing number of boards move their attention to ESG activities, the high-profile nature of this crucial area is becoming even more apparent. Plus, for the many socially responsible investors now looking beyond just financial performance, how business leaders are prioritising ESG amongst their many other objectives will come under greater scrutiny.

Emphasise the link between ESG and enterprise risk management (ERM)

Depending on their business models, activities and strategies, companies will be exposed to a range of ESG risks as well as opportunities. As such, taking a risk-based approach to ESG is not only good business practice but also a vital way in which to plan for the long-term and provide that forward-looking view we mentioned earlier. There are many ways to integrate ESG into your existing ERM processes, though, for an ultimate how-to, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) has developed comprehensive guidance on this topic.

Report on ESG at the right time

With investors interested in both financial and ESG performance, it makes sense to sync the timing of the reports in each of these respective areas to enable a well-rounded evaluation of the numbers. Though bringing these in line with one another may require considerable adjustments to systems and processes for some businesses, the likely time and cost savings resulting from closing this gap could render it a valuable exercise.

Prioritise ESG data accuracy

ESG reports are of little value to stakeholders if the information is unreliable. To provide assurance to interested parties – particularly investors – that ESG data is factually accurate, organisations should take measures to validate all information before it is published. One such way to achieve this is by involving internal audit to ensure appropriate controls and procedures around ESG reporting are in place. External auditors may also be considered to provide attestations as an additional layer of assurance.

Make the data easy to digest

Not only is the demand for easily comparable ESG metrics growing but stakeholders also want ESG reports that are easy to understand. To improve audience engagement, consider presenting the information in line with their needs. Do investors require a downloadable format for further analysis and reporting within their own financial tools? Would customers, employees and suppliers benefit from an online, interactive directory that allows them to quickly navigate to the topics that are of the most interest to them?

Sustainability reporting, whilst not yet a mandate for every organisation, is becoming ever more crucial to enabling stakeholders to make informed decisions based on their own unique priorities. Likewise, a growing number of businesses are integrating ESG into their business strategy to evidence their ability to survive and thrive – whilst making a positive impact - in a world of constant change.

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Written by

Alexandria Claypole

As Content Marketing Executive at Ideagen, Alex delivers insightful and actionable content to help organisations worldwide better understand the intricacies of the auditing, risk and compliance world. With strong roots in the technology sector, Alex is committed to advocating software solutions that support businesses in both achieving and exceeding their objectives.