There is no argument that Environmental, Social and Governance (ESG) reporting has become more relevant to corporations and investors alike. Increasing attention on the future has made measuring ESG data, and conveying a company’s ESG story, a business imperative.
How can companies effectively complete their ESG reporting obligations?
1. Look to the United Nations Sustainable Development Goals as a starting point
A valuable place to start is by considering the sustainability goals laid out in the United Nations’ 2030 Agenda for Sustainable Development. This encompassed seventeen goals that members of the United Nations have committed to achieving by 2030. Considering that it has been in existence for six years now, the sustainability priorities laid forth have been around for more than half a decade now and are now universally accepted.
The goals include things such as gender equality, ensuring sustainable consumption and production patterns; promoting the sustainable use of terrestrial ecosystems and taking urgent action to combat climate change and its impacts to name a few.
It is valuable to consider these goals when measuring ESG progress and reporting. Doing so helps companies to define targets and initiatives that are in alignment with an international benchmark.
2. Choose the right framework(s)
One of the reasons why ESG reporting can be so intimidating is due to the plethora of frameworks available. It is a good idea to choose well-recognised frameworks from the outset. Doing so makes it easier for investors to compare the performance of one company to another, making ESG reporting more effective.
Unfortunately, at this time there is no single universal framework that addresses every industry or business scenario. Therefore, some companies may find it is necessary to report against more than one framework. That said, there are some frameworks that are more widely accepted. These include the Global Reporting Initiative, the CDP and the Sustainability Accounting Standards Board(SASB).
3. Report with the future in mind
Often when companies tell their story, they use past accomplishments as the main metric of their success. For ESG reporting, while listing milestones reached has value, effective reporting needs to be forward looking.
Outlining this year’s targets, and the targets for the next three, five and ten years, adds credibility to a company’s ESG efforts. By including well defined milestones that the company is planning to reach by 2030, in alignment with the United Nations timeframe, demonstrates to investors that a company is committed to its ESG initiatives for the long term.
Additionally, it gives companies a way to measure how successful they are in terms of their 2030 objectives, and what they need to address, or ‘course-correct’, as they move forward.