ESG reporting has become a hot topic.
Stakeholders have become concerned with the impact of the organisations that they buy from, invest in, deal with, or even work for, have from an environmental and social perspective.
The need to show more accountability has meant that organisations who are reporting in a transparent fashion and who are demonstrating ESG performance improvements, have an opportunity to show their ability to mitigate risks and generate sustainable long-term financial returns.
In fact, research by PwC has shown that 65% of investors indicated their motive for taking ESG issues into consideration was to help manage investment risks. Many businesses are choosing to include ESG reporting within their annual reports to present a holistic overview of their organisation and to reassure investors that ESG is at the core of what they do.
Appealing to employees
Employees are also drawn to organisations which are socially and environmentally responsible, particularly the younger generations. When asked about working within different energy sectors, Gen Z respondents in a Morning Consult study indicated an interest in working within industries that limit and reverse damage to the environment. 50% chose solar, while only 15% indicated an interest in the coal industry. 73% said they had some level of concern regarding the impact on climate change.
This could spell danger to organisations competing for talent in the job market and adds further credence to the notion that a transparent approach to ESG reporting is essential to a company’s overall strategy.
Gen Z is fast becoming one of the globes largest consumer groups and a report by BBMG on a national survey conducted in 2018 states that: “Gen Z does not trust business to act in the best interests of society” and a quarter of all respondents could not name a brand that they would consider purposeful.
ESG reporting can enable an organisation to clearly set out its intentions and demonstrate its value as a contributing member of the wider community. It can assist with communicating business strategy even in countries where reporting is not mandatory.
ESG reporting is so sought after that organisations that do not produce the goods may find that investors gather third party reports by outside research firms to make investment decisions. This of course means that the company loses the opportunity of input and oversight.
In conclusion, ESG reporting is not just a matter of reporting, it is also a valuable marketing tool and can enable businesses to set out their stall as a considerate global citizen.