Having recently released our inaugural Sustainability Report, we understand that business as usual is not an option anymore. There is a growing demand for transparency and fact-based disclosure of a business’ sustainability agenda, and how the Environmental, Social and Governance (ESG) performance may impact the decisions of investors in the capital market and ability to access financing.
With that in mind, here are some best practices in ESG reporting that we’ve learned in our journey.
But First… What is ESG Reporting?
An ESG report is published by an organisation to communicate its ESG impacts and sustainability strategies. It allows the company to be transparent about the risks and opportunities it faces, while serving as an engagement tool for all its stakeholders.
An ESG report details topics such as recycling, water consumption, employee health and safety, business ethics and more. Not all companies will adopt the same policies, but most reports will encompass both qualitative disclosures of topics and quantitative metrics used to measure the company’s ESG performance. On that note, let’s start with the elements behind an ESG report.
#1: Key Elements of an ESG Report
As you draft your ESG strategy, your report will mainly have three pillars:
- Environmental
The environmental pillar focuses on a company’s environmental impact such as carbon footprint, water usage, recycling policies, digital waste, and overall effect on the environment. - Social
The social pillar looks at how a company manages its business relationships such as employee wellbeing, having partners with the same values, charity work and other impact it may have on the bigger community. - Governance
The governance pillar refers to how a company operates internally such as accounting standards, tolerance against bribery and corruption, ethics, amongst other of its corporate behaviour and values.
#2 Focus on Your Why
As Simon Sinek says: “Find your why.” Similarly, focus on the reason your company is generating an ESG report. Simply following a herd mentality would not be enough motivation to go through the entire process and keep at it. Whether to offer transparency and awareness, or be better prepared for sudden adversity, it is important to understand why the whole team is investing time, resources, and effort into the entire process.
Working with Adrian Pang, Consultant at Paia Consulting on our report, the sustainability specialist mentioned: “It is important that the company cultivates a collective consciousness, understanding, and desire around embedding ESG into the business – starting from leadership and management. This is because integrating ESG into the business is not a destination but a relentless journey that requires an all-around effort.”
#3: Share Your Company Story
A sustainability report is more than just facts and data. It is a platform to share your company story, values, and goals with a wider group of stakeholders. When we started our ESG reporting journey, we did not only focus on sharing our current values and practices that we were already proud of; but also, the goals that we are driven to achieve. Every organisation has its own set of values and goals, it’s what makes you unique and should be proudly shared.
So…What Makes a Good ESG Report?
Although there are many important factors, the three key factors highlighted by Paia Consulting are:
- Completeness
- Accountability
- Accuracy
A good report covers the entire value chain as completely as possible. It should detail the accountability of responsibilities, achievements and lacking by the company and/or leadership, as well as accuracy of the information presented. All this leads to honest reporting.
Photo Source: Никита Лазоренко from Pixabay
