Today majority of established companies are receiving constant pressure from different bodies. Investors, non-governmental organizations, company employees, and shareholders. All are demanding transparency on sustainability and socially responsible practices, seen through the Environmental, social, and governance ESG reporting. ESG is a factor that has gained popularity and concern over the years. Many investors and clients demand to know the impact they have on the world how they can make it better by maintaining good environmental factors that suit the business and everyone.
Business partnerships or sales are not driven by money or the products you’re selling. In the contemporary world, investors and customers can now weigh their buying options. Based on the impact the company or business has on the world. Some investors and NGOs are on a mission to uncover companies’ performance according to ESG factors. They are working to disclose information about greenhouse gas emissions. How the Companies view and treat human rights factors in the supply chain.
Once they gather information, they aim to publicly shame businesses that don’t adhere to the ESG factors. This is a clear indication of the importance of communicating how your brand is working to meet the ESG factors and reporting. It also shows how your business cares for other stakeholders.
What is ESG reporting?
This is the full disclosure or data provision by companies on the impact and value to ESG. Businesses are expected to provide information about ESG. These provide a quantitative summary of the efforts the company has on ESG factors.
ESG factors
– Environment
The environment factor covers areas on climate change, carbon emission, and air and water quality. It also emphasizes biodiversity, deforestation, energy efficiency, and waste management.
– Social factor
These entail more on customer satisfaction, data protection, human rights, community relations, etc.
– Governance
These high authorities involved in the business include board composition, political contributions, stakeholders, bribery and corruption, etc.
To ease the pressure, many businesses now integrate ESG reporting with annual reporting. This brings a sense of sustainability to the company.
Importance of ESG reporting
Many businesses are widely practicing ESG data communication in different countries. However, the ESG data conveyance is still not mandatory. Many companies are providing the reports willingly during their annual reports. This, as well as high-quality and well-structured report design, shows the importance of communicating their businesses strategies to the employee, and investors.
ESG reports are significant as they give investors a sign of less risk and increased ways to generate revenue. For companies unwilling to provide information, they might have less investor interest and decrease revenue build-up.
The worse factor about not providing the information is when a third-party firm. Provide the reports on behalf of your company, exposing the worse details, thus damaging the company’s name. The company has no power to change or convince investors otherwise, once a bad report is displayed. Having legit and self-constructed ESG information is better; it shows transparency and accountability of your business.
Process of reporting ESG
Presenting financial and ESG details simultaneously are beneficial to the company. It shows excellent performance from the company’s end.
– First, identify all stakeholders impacted by the company and those affecting the company.
– Next, map the material sustainability detail from both inside and outside your business.
– Ensure to understand every relevant issue about the stakeholders. Then learn how to present information about progress to them.
– Now formulate your ESG management, have a proper framework such as ESG issues, performance metrics, targets, etc.
– Utilize all internal resources, your team, and data to ensure you have full information.
– It would be best to communicate externally how the ESG management framework/reporting displays and reflects on your material issues and business strategy.
– Finally, report the ESG performance and involve your stakeholders. To help improve the report by learning about emerging issues that affect your business.
A proper ESG report should focus on the environment, social, and governance. The possible risks and opportunities which will assist your business to grow. It’s advisable always to share your plans to help improve on ESG factors.
