ESG Reporting Essentials
Getting into the world of ESG reporting? Here’s a beginner’s guide on what to focus on and what not to overlook!
From Compliance to Competitive Edge: ThePower of ESG Reporting
ESG has become increasingly important recently, due to a rise in global environmental efforts and social awareness. By providing transparency, it boosts investor confidence and shows that your company remains compliant with regulations, while building trust with stakeholders.
Additionally,ESG reporting is not just about mitigating risks, but is also about avoiding potential costly or wasteful processes. By taking on a proactive approach this demonstrates good operational efficacy and helps to make any improvements that may be necessary.
ESG Reporting and Due Diligence
When it comes to ESG reporting, there are so many areas you have to consider and analyze. Not only do you have to report on operations, but you must also do your due diligence on any partnerships or suppliers you work with. This can get very overwhelming at first! So to help, I’ve narrowed down a couple of areas to focus on first.
Company priorities: Gets tarted by looking at what priorities and commitments your company has made, and focus on areas with heightened due diligence requirements and salient human rights risks. A starting point would be conducting an internal materiality assessment to identify principal topics across ESG that need to be addressed.
Environmental: Focus on the environmental impacts caused by your company, including carbon footprint and the amount of waste that is produced. Be transparent and acknowledge any environmental harm that may have been done and implement plans to mitigate any harm in the future, and also acknowledge any positive impacts that there may be too.
Social: Thoroughly investigate workers’ conditions and ensure that their rights and freedoms are protected. Report on the health and safety measures and contingency plans in place for accidents and emergencies.
Supply chains: It is important to do your due diligence of human rights in the supply chain by making sure that suppliers are treating their workers with respect and are providing safe and decent working and living conditions.
Forced labor: Make sure that there are no forced or child labor practices occurring. Investigate recruitment practices and enforce the implementation of policies surrounding the protection of workers.
Governance: Research potential partnerships to ensure that there is no sign of bribery or corruption. Be extremely cautious of potentially being complicit in any terrorism financing or money laundering schemes.
Additional things to observe
External factors can often play a huge role on the industry and hence they must also betaken into consideration when performing your due diligence.
Legal frameworks: Refer to national and international legal frameworks and comply with any directives andguidelines that may be relevant. Make certain that your company is not in violation of any legally- binding directives.
Political climate: Political instability often leads to uncertainty around investing in the ESG industry.Tariffs, trade wars, and armed conflicts all have major impacts on everythingESG related and is are difficult to anticipate or avoid.
Economic state: Investors maybe more inclined to invest in sustainable finance during periods of economic upswing and may be more cautious during periods of economic degrowth. Be certain and do your due diligence before investing.
Useful Tools
Artificial Intelligence: AI tech enables data automation, analysis, and strengthens accuracy. Using AI will reduce manual efforts and will help to streamline ESG reporting processes.
diginexESG: An example of a user-friendly platform that helps to simplify ESG reporting by analyzing data for you and utilizes AI to ensure validity. Enabling multi-variant drafting, it also supports several different reporting frameworks and has the flexibility of customizable reports too!
Assessments: Worker assessments and questionnaires allow for first-hand reports of working conditions in levels lower down on the supply chain. It is important to have a secure way of receiving the reports to ensure worker anonymity and safety is prioritized.
diginexAPPRISE: An example of an affordable platform that provides worker insights by using a standardized question set to ensureworking conditions are optimal and to identify any red flags.
References Guide
We’ve compiled a list of international legal references and guidance to refer to!
Guidance Area
International Legal Framework
Biodiversity Protection
Convention on Biological Diversity
Business & Human Rights
UN Guiding Principles on Business and Human Rights
Child Labor
ILO C182 – Worst Forms of Child Labor Convention, 1999
Climate Change
United Nations Framework Convention on Climate Change
Corporate Environmental Guidelines
Environment and the OECD Guidelines for Multinational Enterprises
Corruption
UN Convention Against Corruption
Data Protection
Privacy Online: OECD Guidance on Policy and Practices
Discrimination
ILO C111 – Discrimination (Employment and Occupation) Convention, 1958
Due Diligence
OECD Due Diligence Guidance for Responsible Business Conduct
Global Reporting Standards
Global Reporting Initiative Standards
Global Warming & Pollution
Harassment in the Workplace
ILO C190 – Violence and Harassment Convention, 2019
Hazardous Wastes
Health & Safety
ILO Guide to International Labor Standards on Occupational Safety and Health
Human Rights
UN Universal Declaration of Human Rights
Human Rights in Conflict Zones
International Legal Protection of Human Rights in Conflict Zones
Human Trafficking
Mineral Supply Chain
OECD Due Diligence Guidance for Responsible Supply Chains of Minerals
Ozone Layer Protection
Responsible Business Conduct
OECD Guidelines for Multinational Enterprises on Responsible Business Conduct
Rights at Work
ILO Declaration on Fundamental Principles and Rights at Work
Rights of Migrant Workers
UN International Convention on the Protection of the Rights of All Migrant Workers
Safe and Decent Working Conditions
UN International Covenant on Economic, Social and Cultural Rights
Sea Law
UN Convention on the Law of the Sea
Social Responsibility
ISO 26000: 2010, Guidance on social responsibility
Wage Protection
ILO C095 – Protection of Wages Convention, 1949
Water Pollution
Convention on the Protection and Use of Transboundary Watercourses and International Lakes
Taking the Next Step
ESG reporting is no longer an optional process, but an essential one to enhance transparency, risk management, and accountability. By clearly and accurately communicating our company’s environmental, social, and governance commitments and progress, this builds trust with investors and other stakeholders, unlocking various new growth opportunities. Creating regular ESG reports along with actionable goals will show your company’s commitment to sustainable business practices, ensuring long-term impact and value that will be delivered!
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