For any business to be successful today, its operating design has to factor in sustainability reporting. However, this is proving to be a major challenge for many companies, which makes them go for ESG consulting services, the best method of getting the reporting process right.
We have reached another point where consumers and investors no longer want to be associated with companies linked to malpractices, such as causing harm to the environment or engaging in child labor. The emerging policies, laws, and international standards on ESG reporting are still nascent, but you cannot afford to present greenwashed reports to avoid scaring away stakeholders.
Some company leaders and entrepreneurs have been asking one major question, “When do you go for ESG consulting services?” Here are specific scenarios which should signal to you that it is time to seek expert assistance consulting.
The Changing Face of ESG Reporting Necessitating the Input of Experts
ESG sustainability reporting is the disclosure of a company’s impacts in three areas: environmental, social, and governance. The aim is to help companies change their operating design by adopting a responsible model and reporting to stakeholders.
One of the reasons why companies find sustainability reporting a challenge is that the process is evolving. Initially, the process was voluntary, but not any longer. Now, new policies are making the process mandatory. For example, HKEX and LSE only allow the listing of firms that prepare comprehensive ESG reports. In the case of HKEX, the requirement calls for clear prediction of challenges in the future plus strategies for addressing them.
In the EU, the passing of the Taxonomy legislation has been a game-changer. Now, investors no longer have to guess whether an action taken by a company is sustainable or not.
All they need to do is counter checking with the Taxonomy legislation.
In the UK, the country’s administration has indicated that all companies will be required to make public disclosures using the Task-force on Climate-related Financial Disclosures (TCFD). So, if you are used to simply preparing financial reports at the end of the financial year, know that change is coming and it is better to be prepared for it.
The Process of ESG Sustainability Reporting
To understand why ESG reporting is so challenging for most companies, let's have a look at the entire process. Remember that the actual steps might vary depending on the type of company and selected framework. So here are the key stages involved in ESG sustainability reporting:
- A review of the Company’s Opportunities and Risks
This step helps to identify the challenges that a company faces with the intention of creating strategies for addressing them and craft strategy improvement.
- Stakeholder Involvement
As we indicated at the start of this post, ESG reports are prepared for stakeholders, but you cannot simply pick topics without involving them. Therefore, it is important to bring them on board and ask what they believe should be given priority in ESG reporting.
- Materiality Assessment
Armed with the report from company assessment and stakeholders’ recommendations, the next step is identifying the reporting topics through materiality assessment. The best approach is to check the topics that will create the biggest impacts. A company dealing with real estate might want to prioritize forest restoration while a banking institution selects support for initiatives to fight cybercrime.
- Develop a Strategy for Addressing Sustainability Impacts
Once the reporting topics are selected, a plan for addressing the impacts is drawn. For example, you might have a plan to reduce greenhouse gasses (GHG) by 10% in the first year, 30% in the second year, and 50% by the end of six years. Make sure the plan includes full details of how both the short and long-term goals would be achieved. Some of the main actions that you might want to include in your pan include:
- Shifting to eco-friendly sources of energy.
- Changing the source of raw materials.
- Engaging different parties in the supply chain to make them adopt sustainable operations and report their operations.
- Adopting strategies for staff training and workplace diversity.
- Funding conservation activities, especially in the areas where your company’s operations are based.
- Collect Data and Prepare Your Report
This is considered the most challenging stage when it comes to sustainability reporting because it is an ongoing process and it requires technical expertise. In this stage, you capture the data about the entire process and create a report for stakeholders.
Try to make the information as clear and verifiable as possible. To get this stage correct, most companies opt to work with sustainability consulting services.
When Do You Use ESG Sustainability Reporting Services?
As you can see, the process of sustainability reporting can be lengthy and technical. This is why you should consider bringing on board experts for help. To know when your company needs to hire sustainability consulting services, here are the signs to look for:
You Do Not Have Qualified Staff to Handle ESG Reporting
If your team lacks the capacity to interpret the sustainability reporting requirements and related policies, it can be an uphill task preparing ESG reports. In this case, you should bring experts to help with the process from the start to the end. The professionals will advise you on the framework to use, select the best reporting topics, and ultimately create high-quality ESG reports.
Targeting to Shake Off the Tag of Greenwashed Reports
If you have attempted to prepare ESG reports, but the process did not go well, it will be a good idea to start by learning from experts. You can enlist the sustainability consulting services to help with the areas that are challenging. In most cases, these are parts of materiality assessment, data gathering, data analysis, and report generation.
To Transform ESG Reporting into Pillars of Success
The process of sustainability reporting is mainly driven by the emerging laws and policies of different authorities, but what more can you achieve with it? Working with sustainability consulting services can help you use the reporting process to unlock the potential of your company.
The data you gather should not just be used to create the ESG reports but also to provide insights into the mechanics of the enterprise.
Experts will be able to look at the challenges and opportunities for your company and pinpoint ways to reinforce its strategy for success. For example, the target to cut down emission rates should go hand in hand with improving the efficiency of the company. If this is maintained over a long period, the cost of production will come down, and revenue will go up.
These are only a few indicators that it is time to go for sustainability consulting services. Remember that to enjoy all the benefits of ESG reporting; you have to go for the best consulting firm. This is an agency with the best professionals, the latest sustainability management software, and a proven track record. At Diginex.com, you can count on us to get every bit of sustainability reporting correct.
Talk to our experts now and let them hold your hands in the ESG sustainability reporting journey.