The world ischangingrather fast. Unlike in the past, stakeholders, fromcustomers to investors, nowdemandthatyour brand beresponsible for all its actions if youwant to getthem to buy, invest, and workwithyou. This iswhy ESG sustainability reporting has becomesocritical for all businesses. So, how does ESG reportingwork?
ESG (environmental, social, and environmental) sustainabilityreportingis the disclosure process of the impacts that a companymakes in the course of itsoperations. The reporting has become the norm, with more institutions and regulatoryauthoritiesdemanding a thorough process by companieswithintheirjurisdictions.
A good exampleis the Hong Kong Stock Exchange, whichrequires all listedfirms to providedetailed ESG reports capturingtheir future risks and how theyexpect to addressthem.
One fact about ESG reportingisthatitcomeswithsomecosts. Indeed, somecompanies highlight this as a major obstacle in theirsustainability efforts. Others have evenpointedit out as a costthat can beavoided, but these are misconceptions. As we aregoing to demonstrate, ESG sustainabilityreportingwillmake a case for the costs and further open the enterprise for success.
Whatis the Process of ESG SustainabilityReporting
Beforewe can look at how the ESG process justifies the cost, let’sunderstand the process. To run a successful ESG reporting process, here are the main procedures:
- Establish: This is an assessment of a company’sprocedures to identifyrisks and opportunities for action. At this point, youalso engage stakeholders to establishwhattheywant. Well, ESG sustainabilityreportingis all about the stakeholders and youneed to put them at the core of the process.
- Design and implementation: This isanother crucial stage whereyoucraft a strategy for action. Depending on the stakeholder’spreference, youmightwant to promotegenderparity, cut down emissions, or focus on conservation.
- Gather data and createyourreport: Once you set the ballrolling, itis time to gather data and ensurethat key performance indicators are being met. Rememberthat to enjoy all the benefits of sustainabilityreporting;the data has to beaccurate and verifiable. As youcreate the sustainability report, ensureitiseasy for stakeholders to read and understandsothatthey can make correct decisions.
How ESG Reportingmakes a case for the Costs
Whileitistruethat the above process requiresenoughfunds, itis a justifiable process. Actually, youshouldconsideritanotherprimary process of the business, whichisvery important in definingitssuccess. Hereis how to go about it:
- Use MaterialityAssessment to Make a Case for ESG Reporting
Whencommencing the process of ESG sustainabilityreporting, carry a comprehensivematerialityassessment,whichincreases engagement with stakeholders. Fromshareholders to investors and customers, theywill tell youwhattheyprefer. If theyprefercutting down emissions or treatingwaste, costs for theseactivitieswillbejustified.
- Ingrain ESG Reportinginto the Long Term Planning of the Company
For mostcompanies, ESG reporting-relatedcostsappear high becausethey are looked at from the short-term. However, thisis the wrongway to do it. Instead, youshouldthink about the benefits of ESG sustainabilityreportingin the long term. For example, what are the risks and opportunities of ESG sustainabilityreporting in the next five, ten or twentyyears?
- Use Sustainability Management Software to Simplify and Cut Down the Costs
Now, thisisanother angle. Even as stakeholders approve the spending for ESG reporting, you can still push the cost down. The best way to do thisisusingESG sustainabilityreportingsoftware. A good program makesit possible to collect data on time, follow the right procedure, and generate top-quality reports.
As you can see, the notion of costswhenitcomes to ESG reportingis crucial, but youshould not think of it as a standalone process. Instead, youneed to think about it as a crucial part of the organization.