What is ESG?
Environmental, Social and Governance criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments.
Why ESG reporting matters to your company?
Today financial results are not the only measure by which firms are valued on the market.
Social and environmental outcomes of a company are critical to the sustainability of
company growth.
Investors are requesting information on the commitment to the three ESG pillars. In coming
years, their request could be a requirement. An ESG minded company attracts more
investment and channels a positive message to shareholders. The environmental, social and
governance standards have become the leading indicators of measuring management
competence, risk management, and financial performance. A Sustainable, Responsible,
Impact investment strategy is based on the belief that a commitment to the principals of
Corporate Social Responsibility (CSR) generated long-term competitive financial returns as
well as positively impacts society. For investors and lenders, reducing the risk associated
with sustainability of performance is immensely important.
In our ever-changing society, transparency on the issues of environment, social responsibility
and corporate leadership are becoming more important. Investors are turning their backs on
companies that do not offer information on these areas. There is a need to “tell our story” to
compete in the investment world.
Is a Sustainability report a new operational requirement?
No. ESG reporting is voluntary. However, there is a general guidance by most stock
exchanges for listed companies to be transparent with the public and disclose as much ESG
information as possible as part of their annual disclosures process.
What is typically included in a Sustainability report?
To be effective a Sustainability report should generally include a company’s impact on
climate change and carbon emissions, water use, conservation efforts, anti-corruption
policies, board compilation including how directors are elected, the audit committee
structure and diversity in gender. It is important to also highlight diversity in industry
backgrounds inside the board of directors. Of course, safety measures, data protection,
employee engagement including efforts for positive team dynamics and transparency from
management to teams are all important metrics. Moreover, information about community
development, local corporate engagement and giving should also be included.
Who is a Sustainability report written for?
Companies should communicate their ESG analysis and plans to shareholders and the
community at large. It should be posted on their website and easily available to the public.
What are the basics of creating an effective Sustainability report?
1. Develop your Company’s ESG philosophy and priorities.
2. Determine which ESG issues and data are material to your company and to key
stakeholders.
3. Set a goal to publish an ESG or Sustainability Report or ESG Website once you have
sufficient ESG information to report.
4. Confirm your proxy, investor decks, shareholder engagement decks and website are
consistent regarding ESG disclosures
5. Incorporate ESG practices into your operations, where appropriate, as well as
management and board oversight.
6. Review and update the ESG portion of your website and your ESG/Sustainability report
at least annually