In the coming years, supposedly not so long from now, ESG and climate considerations for companies are expected to be central in mainstream investing. The latest trends indicate that ESG reporting is gaining traction faster than expected as more stakeholders, authorities, and governments intensify the call for responsible business operations. In 2020 alone, 92% of companies on the S&P 500 published their ESG reports. This was a massive jump from 65% recorded in 2019.
The UK has indicated that all companies will be required to follow the Task Force on Climate-related Financial Disclosures (TCFD) guidelines for ESG reporting from 2025, while stock markets like HKEX and NYSE are already demanding annual sustainability reports. Even with this growing focus and the benefits that come with ESG reporting, concerns about the quality of reports and greenwashing remain rife. You cannot allow your company to fall into this negative category.
So, if you have been wondering "how to improve my ESG sustainability reporting,” this guide has all the answers.
If you are new to sustainability reporting, it is crucial to start from the basics. Environmental, social, and governance (ESG) reporting is an emerging discipline requiring companies to prove to stakeholders that they positively impact the planet and society.
As the acronym ESG suggests, it comprises three primary criteria: environmental (resource use, pollution, waste reduction), social (workplace diversity, relation with society, support for social justice), and governance (internal business systems, leadership trends, board composition, anti-corruption efforts). While the criteria we have outlined are clearly divided, they are intertwined. For example, a company that introduces a new policy on sustainability might impact the production line, staff organization, cut down emissions, and reduce waste at the source.
When thinking of “how to improve my ESG reporting,” you need to appreciate that although the primary target is creating a business report for stakeholders, it goes way beyond that. ESG sustainability reporting focuses on changing a company’s design so that sustainability becomes a major agenda for company operations. The good thing about ESG sustainability reporting for a company is that it comes with major benefits, such as cutting down operating costs and compliance. Therefore, you should stop at nothing to improve the ESG reporting process.
Improving ESG sustainability reporting can help your company win stakeholders’ support and deliver special satisfaction from knowing you are part of the global efforts in addressing global warming and other global challenges. So, here are the strategies for improving environmental, social and governance (ESG) sustainability reporting.
One fact about ESG sustainability reporting is that it can be pretty complex. If you are getting started or running an organization with multiple branches, the process might be even more complicated. The main challenge of sustainability reporting management comes from the need to track all parameters, such as energy use, emission, workplace diversity, social outreach programs, and financial performance of an organization.
Now, throw in more requirements, such as regulations, stock market guidelines, and confines of ESG framework’s standards, and reporting becomes a near impossibility.
As a company’s manager, entrepreneur, or project manager, the best way to overcome these complexities is to bring on board an expert. These are professionals with extensive experience in ESG reporting. They have helped other brands achieve their ESG mandates and can assist you with the entire process from company review to preparing the final report. An expert can also assist you to surpass the targets set by your government via selecting the most material topics and delivering reports in line with the principles of ESG reporting.
Investors and stakeholders are interested in knowing how your organization is responding to the latest trends, especially ESG risks and opportunities. They want to know how well your company is positioning itself to overcome unforeseen challenges in the future. One of the biggest mistakes that people make is preparing reports only for the stakeholders. This approach only results in poor reports that do not adhere to the sustainability reporting principle of continuity.
By integrating ESG reporting into your company strategy, the focus on sustainability becomes an ongoing thing. If it is cutting down emissions, the company adopts strategies that will deliver results over the long term to win the support of investors and other stakeholders. For example, the shift to green energy will not be simply for demonstration purposes, but the company can move a step ahead and partner with research firms working on solar products and encourage other firms in the supply chain to go green.
The integration of sustainability reporting into your company strategy means that it shifts from being seen as a “cost that can be foregone” into a crucial stepping stone for success.
Therefore, your company leadership, staff, and every system will be adapted to the new norm. This way, reporting will become intuitive, more beneficial, simpler, and fun.
As you think of “how to improve my ESG reporting,” it is important to appreciate that everything narrows down to data. The information on greenhouse gas emissions (GHG), carbon footprint reduction and other issues, and long-term strategy/ targets, are all presented using data. As we indicated earlier, this data must flow from different areas, such as the production line and financial planning, and trying to handle it manually or with standard software is likely to result in very poor reports.
The best way to handle different and growing sets of data is working with appropriate sustainability reporting software. Good software not only simplifies the task of data gathering and analysis but also allows you to easily track key performance indicators of sustainability. For example, you can integrate the app with your management system, automate some parts of data collection, and even prepare mini-reports for your team to read and follow progress.
Finally, ESG reporting software by top brands such as Diginex.com allows you to run correct data analysis and prepare reports that sparkle. With these reports, stakeholders can comfortably view/read and verify data by following back the process.
Well, do not leave anything to chance when it comes to sustainability reporting. Instead, you should go for the best app and stick to the recommended reporting framework.
This post has demonstrated that ESG sustainability reporting is emerging as the new norm, but the process is never easy. Instead of creating poor reports that come with serious risks like loss of money, poor support by stakeholders, and non-compliance, consider using the tips we have listed above. They provide an excellent starting point, but you should not stop there. In addition, you should consider bringing in more parties in your supply chain into the sustainability reporting bracket to help save the planet.
Does your organization consider strengthening its supply due diligence by including worker voices? Read our anticipated worker voice trends for 2023!
Is your company better suited to multiple frameworks? Can you even do that? What if we at Diginex were to tell you that you could!