For your business to be successful, one of the most important things that you need to get right is ESG sustainability reporting. This is the process of reporting your company's impacts to stakeholders to help them gauge the commitment to sustainability. It is an emerging discipline that stakeholders, from governments to consumers, are banking on to address the challenges facing the planet. Unlike a few years back when ESG sustainability matters were mainly voluntary, it is now becoming a mandatory requirement.
The UK administration has indicated it will make it mandatory for all companies to follow the Task-force for Climate-related Financial Disclosures (TCFD), the EU has passed the Taxonomy legislation, and Hong Kong Stock Exchange (HKEX) has set out guidelines for ESG reporting. With the list of parties, including consumers, calling for responsible operations growing by the day, your business has to get it right. This post digs deeper into the concept to identify some of the ESG operations that your company can undertake.
What is ESG Sustainability?
To understand the concept of sustainability and identify the ESG operations to focus on, it is important to go back to the beginning and establish what “sustainability” is. This concept can be traced back to 1992 when the UN held the first-ever meeting on environment and development, UNCED. The meeting’s agenda was sustainability, and it was emphasized in the subsequent summits, such as the World Summit on Sustainable Development (WSSD) and the recent Paris Climate Summit of 2015.
The meetings also expanded on the concept to form three main pillars, which form the basis of the ESG operations in companies.
- Environmental: This pillar demonstrates how strong a company acts towards concerns for the environment. The focus for this is on things such as waste management, greenhouse gas emissions, and climate change initiatives.
- Social: This pillar targets to determine the company's focus on upholding social values both in the company and away. It examines things such as equity, diversity, and inclusion.
- Governance: This criteria deals with an organization's leadership and touches on things such as financial performance, ethics, leadership, and shareholder rights.
How to Determine ESG Operations for Your Company
The three pillars we have highlighted above touch on every aspect of company operations, from production to leadership. So, how exactly do you determine the right operations?
The answer is to adopt ESG reporting in your company. Although the process of ESG reporting provides freedom for companies to determine what they want to do, it is advisable only to pick the operations that deliver the best value. The initial steps of the ESG reporting process can also help you pick the perfect topics.
- A review of the company’s operations
This is the first step in the process of ESG sustainability reporting, and it helps to identify key sustainability challenges. For example, is your company's operating efficiency low because of poor staff morale or production dynamics?
- Stakeholder involvement
To get it right with ESG operations, it is important to give focus on stakeholders, and this involves roping them at the beginning of ESG reporting. This means that although you might have a good idea of what ESG operations are, it is better to go with what stakeholders want. For example, you might want to focus on supporting social justice in other countries, which is pretty okay, but stakeholders want more efforts directed at cutting down greenhouse gas (GHG) emissions.
- Materiality assessment
This is perhaps the most important tool for identifying ESG operations in your company. Materiality means that you only select the actions that have the biggest impact. For a company that has a very high carbon footprint, reducing greenhouse gas emissions might be more material than other activities. You might want to consider using tools such as the SASB Materiality map to identify what issues are more material for your company.
- Employ the principle of continuity from the previous ESG sustainability report
ESG sustainability efforts are continuous. Therefore, picking the best ESG operations can be determined by looking at the actions from the previous ESG or corporate social responsibility reports. If there were actions planned for long-term applications, perhaps three, five or more years, craft a plan that helps to achieve the original goal. If the report does not have long term plans, check for the main achievements and focus on advancing them to the next level.
What ESG Operations Should You Consider for Your Company?
Now that you know the main steps for identifying the best ESG operations, it is time to get down to work. Here are some of the ESG operations that will impress stakeholders:
- Cut down waste coming from your company by going paperless. For example, you can use email and chatbots to pass info instead of direct contact type of communication.
- Shift to renewable energy to reduce your company’s carbon footprint. Note that this might require some change of infrastructure to help make the new energy system work. In most States of the US, Micon in Georgia, and other urban regions in Europe, shifting to renewable energy can help your company enjoy some incentives.
- Train staff on matters of sustainability.
- Reduce water use in your company. This should come alongside improved wastewater management to reduce negative impact on the environment.
- Change product design to start using more sustainable materials.
- Change the lighting system of your company to more energy-efficient lamps.
- Partner and support organizations that are working on social-related programs.
- Identify and support initiatives or services that are designed to help restore biodiversity and reduce carbon dioxide from the atmosphere.
- Engage other stakeholders in the supply chain network to ensure they also adopt sustainability in their operations. You might want to rethink the contracts to include the best ESG practices.
ESG Operations and Reporting: What Do You Need?
Narrowing down to the preferred ESG operations only marks the beginning of the process sustainability reporting process. What you are doing for sustainability should be reported to stakeholders so that they can appreciate and support the company. Depending on the location, industry, and local institutions, ESG reporting might be a matter of compliance. For example, a company listed on the Hong Kong stock exchange (HKEX) must provide a comprehensive ESG report annually or risk delisting.
To report all ESG operations correctly, you need to have a good framework, such as the Global Reporting Initiative (GRI) or the Global Carbon Project (GCP).
The framework will help you to know the items to focus on and the procedure to follow for ESG reporting.
The entire process of ESG operations reporting is data-driven. From the company review to data gathering and report generation, you will need to deal with multiple categories of data. For example, you need to harmonize the carbon emission reduction levels with governance strategies, and social activities. To ensure that the data is collected correctly, analyzed using the right procedure, and the report prepared professionally, make sure to pick the best ESG sustainability management software.
At Diginex.com, we are dedicated to ensuring you achieve sustainability goals to stand out. We have the best ESG sustainability software that you can count on to make the process simpler and more convenient. We also have experts on ESG to help you figure out the best strategies, set clear objectives, and achieve them. Talk to us now for all your ESG needs.