What is ESG Reporting?
Environment Social and Governance reporting (ESG) is going to become a key part of any business. It is the concept of increasing the accountability of businesses. For business leaders, it comes down to attracting the right stakeholders to your business. And for stakeholders, it means being able to make more informed decisions about where your money will go. Ultimately, ESG reporting is just one necessary step towards reversing the damage business has put on people and the planet. Let’s break it down.
ESG Reporting and the Fight Against Climate Change
Some experts say ESG reporting is the bare minimum that governments should require from companies in efforts to reach climate goals. It can empower consumers and stakeholders to feel confident that their money is being used for something they believe in. And that can influence entire markets. Have you seen or heard about the documentary Our Planet: Too Big to Fail? It shows economic experts from around the world looking at the climate crisis through a financial lens. One thing they stress is the importance of improved ESG reporting.
In the past, and even now, it has been considered something that was ‘nice to have’ but not necessary. However, it will soon become a legal requirement, at least for large entities.
If presented well, ESG reporting can be critical for guiding stakeholder investment decisions. Improved ESG will make all stakeholders be much more confident their money is being spent on companies whose values align with their own.
Looking after the environment is a melding of selfish and selfless interests. We must selflessly protect the planet for future generations but sustainable business is also a money-making opportunity. So, today’s young investors, and those to come, are looking at growing industries, new technologies and transparent, maybe even circular, supply-chains. How would your business fair up right now?
ESG Reporting for Social Change
The world has long been demanding a more fair and egalitarian society. So, if your company does not embrace diversity and social justice, it will fall behind. But who’s tracking fair treatment of workers across every supply chain, in every industry? If ESG reporting is mandatory and regulated well then any companies using social justice as a façade, rather than practising it at all levels of operation, will be exposed. This might sound scary for some but capitalism only really works and is only fair when the consumer knows exactly what they are buying.
What are the Advantages?
From a business perspective, companies who value stakeholder loyalty will actually receive it in greater confidence. For the environment, it is necessary to hold companies to a much higher standard of green practice. What is the point of increasing market growth if eventually there will be no market?
From a social perspective equality has been shown to improve ideas and creativity, making a better, more positive and productive work environment for everyone. The UK has big plans for green finance alongside advancing ESG reporting structures.
Where to start with ESG reporting?
Leaders should consider up to five ESG criteria that can be measured within their business and report on these. Detail is important. You need to create and implement a process that enables the collection of environmental and social risks in a coherent, centralised way. This will help ensure that the ESG reports you produce are complete. It will also simplify the collection of that data and your ability to identify and rectify problems within your organisation.
Is your business beyond it’s COVID-19 survival mode? Then what’s your next strategy?
For advice in regards to preparing for increased ESG reporting, don’t hesitate to reach out to our team. At CBHC, we believe business can be the positive change our communities need.