Why we need to have transparency in ESG reporting…
It’s no longer enough for a business to simply state it is sustainable in all operations. With increasing legislation surrounding environmental, societal and corporate governance (ESG), and the media awash with accusations of greenwashing aimed at major brands, businesses need to be transparent when making sustainability claims.
However, effectively measuring ESG is by no means a simple feat. Reporting standards for ESG remain in their infancy and ratings between different agencies differ greatly. This makes many stakeholders sceptical of standard ESG disclosures that are not backed by evidence and transparent reporting – so how can your business demonstrate its ESG credentials and make a positive impact?
To make ESG reporting more trustworthy to stakeholders, it’s important that businesses disclose as much as possible. Start from your sustainability strategy and evaluate each chapter. Think back to the areas of your business you stated would become more sustainable and measure your success for each one. Consider what steps you have made towards your goals; this could be investing in technology, increasing recycling rates or reducing scope three supply chain emissions. Even definitive actions such as recruiting sustainability specialists into your business can help demonstrate ESG success.
As ESG regulations continue to increase and legislation becomes more refined, it is also a good idea to continually publish sustainability reports to make investors aware of how you are mitigating risks and implementing new initiatives and processes towards your ESG goals. An annual sustainability report helps make ESG reporting more trustworthy, particularly when they consider results across the triple bottom line, encompassing people, the planet and profit.
For the latter, consider the financial returns from ESG strategies; for example, are you saving money from consolidating your supply chain to reduce carbon consumption? Are you able to reinvest profits back into the business for new sustainability initiatives? Making such achievements transparent to stakeholders helps add credibility behind your ESG reporting.
Impact on society
One of the key parts of ESG that many companies typically ignore in favour of environment in the sustainability conversation, is that of society. Any ESG report should include information about your company’s impact on society and the environment. This goes beyond simply recruiting people from the local community – consider instead your impact on industry.
For example, many major food and beverage retailers have committed to supporting farmers transition towards more sustainable forms of agriculture, as part of their pledge to stock and sell more sustainably produced goods. Such a goal is something that will be realised long-term, so it’s important to publish information on the steps you are taking, however small, towards such initiatives.
Make ESG realistic
ESG reporting should disclose real-life examples of associated projects within your organisation, with the devil quite literally being in the detail. It’s not enough to state that you are working towards achieving the UN’s Sustainable Development Goals, or The Paris Climate Agreement. Instead, stakeholders want to see which actual projects and initiatives you have implemented to work towards these. Remember also, that all businesses are working towards these global targets, because local governments typically mandate them to. How you take steps towards them shows your real ESG success and makes you stand out from other organisations.
ESG reporting is not just a compliance issue and not just about communicating with stakeholders – it represents the work your company is doing to help prevent an existential threat. You only have to look at the impacts of extreme weather events alone such as floods, wildfires and droughts. These are causing real-life implications of climate change that businesses must work to mitigate, for the good of all society. As such, ESG reporting is not a nice corporate tool, but an essential one which all businesses should take action on.
At Wylde Connections, we take a pragmatic approach to helping businesses with ESG reporting. It starts with implementing robust strategies and reporting on how we have implemented every stage. Our belief is that if every business started taking actions to reduce its impact and increase positive and regenerative behaviours, then the collective efforts could make a huge difference. That’s what ESG reporting is really all about.
To find out more, contact us at firstname.lastname@example.org