Pollution tends to be directly emitted from businesses’ product production, especially manufacturing companies. And sadly this emission, or more like years of it, has had a large impact on our environment. It is affecting the air we breathe, the lands and waterways.
Clearly, pollution is one of humanity’s biggest challenge so, why not start somewhere where we can show the importance we have for our planet and its rapid disintegration, especially if you own a business or work for one. By simply disclosing an ESG report, the company will seem conscientious, will gain benefits and more. It takes only one to start a train reaction.
This article will define its meaning, importance and cite an ESG report example.
What is an ESG report?
Some may say this concept is not entirely new, as it firstly appeared in the early 2000s, specifically 2001. However, few companies were already ahead of time with their report of the social, ethical, or environmental issues (SSE), or socially responsible investment (SRI).
An ESG report, sometimes referred to as ESG disclosure and purpose-led reporting, relates to an organization’s environmental, social and governance performance. It is a report that a company publishes regarding their actions on environmental matters, their social aspect, or plainly said their engagement with society and finally their governance.
In the beginning, ESG reporting did not have the significance that it now possesses. It was not common, and worse, held no structure or consistency. The information divulged in the reports by the companies differed immensely.
But, all of that changed for businesses when ESG reports were administered greater importance by investors and creditors, driving companies to be straightforward, more efficient and disciplined with their disclosures. Equally, it is the increase of regulations and policies leading to this de rigueur process.
Why is an ESG report important?
Well, we all play an indispensable role in the conservation of our planet. It is becoming quite significant for companies as not only investors and creditors are now requiring them to disclose their sustainability, environmental and governance strategies. Some countries have also instated regulations to hold people accountable.
It allows businesses to be more transparent about their problems, risks and opportunities they are facing and double their efforts at adapting to any circumstances.
ESG reporting is also quite necessary to manage and bridge the gap between companies and investors. There will be no more “he said, she said”, but a concrete proof of their ecological intentions. It depicts a clear meaning of the business’ value and the type of risk they are looking to endure, if faced with sanctions.
Furthermore, it is evident that companies that foresee the future environmental dangers, that decide to take the fundamental precautions to avoid such, will look sustainable in the long-term and attractive to an investor. Why? Because when business owners participate in this eco-friendly process, their operational costs are lowered, they receive government support, funding from banks and perform better than companies that do not. Makes sense why investors would turn a blind eye to non-eco, right? They want to reduce that investment risk as much as possible.
Finally, it is only growing, as it is estimated that at least 80% of investors have an ESG component when seeking to partner or hold shares in businesses.
How to develop an ESG report?
Now that its value has previously been stated, it is essential to know how to develop your ESG report, so you can be ready for investors and creditors’ harvesting season.
As it can be considered as your collected data, what you will need to do is:
- Analyze and classify the series of stakeholders who impact your company and vice versa.
- Delineate your business’ internal and external material sustainability difficulties such as gender diversity, GHG emissions to stakeholder and, particularly, suitable and proper ones.
- Figure out the importance those issues hold for your shareholders and how to expertly deliver their development, evolution to them.
- Assemble and prepare internal resources, teams and data necessary to get your report started
- And then, present your ESG reporting framework to stakeholders, while trying to improve your impact, but not forgetting to constantly keep them in the loop about the ecological issues encountered in the business.
What is included in an ESG report?
An ESG report has 3 main categories, and below you’ll find what you can include:
1. Environmental category
- Climate change by taking initiatives to improve environmental issues,
- water conservation,
- limits of harmful pollutants and chemicals,
- lowering greenhouse gas emissions.
2. Social category
- Respecting standards of labor,
- employee relationship,
- human rights,
- has policies to protect against sexual misconduct,
- pays fair wages.
- Tax evasion,
- fraud and corruption,
- compliance of data,
- evokes transparency.
ESG report example
Here is an ESG report example reporting image:
It shows you the criteria it includes. You should publish a thoroughly thought out ESG report not only for investors, but accessible to colleagues, business partners and suppliers. A great way to increase morale, while protecting the planet.
So you will have understood that a report, especially, when you’re a novice is quite beneficial in the end. To make it interesting, you could use case studies, less random statistics, use well-designed graphics if you can. And you’ll have a lovely ESG report.