map and compass signifying that companies will need to find their way with ESG reporting

How to Make an ESG Report

ESG reporting is a document that provides transparency on environmental, social, and governance risks and opportunities. This document should provide information to stakeholders about the company’s adherence to sustainability goals and how they can identify opportunities for improvement. ESG reports are becoming more popular as investors focus their attention on companies’ environmental performance in addition to financial statements.

ESG reporting allows companies to visualize the degree of their commitment towards sustainability goals while identifying areas for improvement which may help improve company standings among consumers. The report should contain relevant data such as comparisons against benchmarks, management commentary, and future plans which will be discussed below. The purpose of this article is to discuss everything you need to know about making an ESG report including what it entails, how it should be formatted, and what information it should contain.

What is an ESG Report?

ESG reporting is a document that provides transparency on environmental, social, and governance risks and opportunities. This document should provide information to stakeholders about the company’s adherence to sustainability goals and how they can identify opportunities for improvement. ESG reports are becoming more popular as investors focus their attention on companies’ environmental performance in addition to financial statements.

What ESG Reporting Is Not

ESG reporting should not inhibit the company from achieving its mission, vision, or goals as stated in their business plan. The reporting process should be integrated into daily workflows as opposed to an additional task that takes up an enormous amount of time. If employees are spending too much time completing ESG reports, it is counterproductive to the company’s success. Similarly, companies should not try to do too much when reporting on ESG issues. It is important for companies to take into consideration that they are not experts in all areas of sustainability especially if they are outside of their industry. For example, if a technology company were to report on greenhouse gas emissions or waste management practices, it would be misleading since these topics fall under the purview of environmental science and engineering experts.

ESG reporting should also not replace other reporting such as financial or sustainability reports that may be required by government agencies. It is important to keep in mind what these reports are trying to communicate and whether they would serve the same purpose if they were included in an ESG report.

Finally, companies should not expect ESG reporting to lead to immediate changes in the behaviors of their stakeholders. It is a slow process that requires buy-in from all levels of employees. The goal should be to have an open dialogue on ESG issues so that people are aware of what they can do to improve practices within the company and work towards sustainability goals.

The 6 Benefits of Making an ESG Report

ESG reporting has several benefits for companies:

  • First, it can help visualize the degree to which they are adhering to sustainability goals.
  • Second, it can help identify opportunities for improvement.
  • Third, it fosters engagement from a variety of stakeholders which can lead to stronger relationships and better communication.
  • Fourth, it encourages accountability over time as the company is held accountable to their previous progress reports.
  • Fifth, it helps provide transparency to all parties involved with the company’s value creation process.
  • Finally, it can impact consumers, employees, and investors.

Who are Stakeholders?

Stakeholders are individuals who have a vested interest in the company. Stakeholders include government officials, employees of the company, shareholders, banks that loan money to the company, customers buying products or services from the company, suppliers of materials for the company, unions representing employees, community members affected by environmental hazards, and more. They also include groups such as environmental non-governmental organizations (NGOs) and charities, civil groups, local communities, and organizations.

How to Make an ESG Report

ESG reporting should completely align with the company’s business plan and goals in order for it to be viewed as a useful tool. This approach helps companies easily communicate their sustainability goals, which aids in making connections with investors and employees.

To get started, companies will want to look at existing reports to see how other companies have taken this approach. For example, the Global Reporting Initiative is a leading nonprofit organization that helps companies set guidelines for ESG reporting . The GRI provides free tools and resources designed to help companies create a sustainability report that is useful for investors, employees, customers, and others.

As part of the GRI disclosure framework, companies are encouraged to report on current issues that are relevant to the company. For example, companies should report on whether they have any plans for future investments in renewable energy generation or waste management facilities. This approach helps demonstrate a commitment to long-term sustainability while also providing transparency.

Different Reports for Different Audiences

The information in an ESG report should be easy to understand and available in a format that is relevant and useful for each audience. Investors want to see detailed financial data, while employees need access to ESG information that relates to their daily operations.

Companies can create multiple reports depending on the needs of their stakeholders. For example, one comprehensive report which includes all of the most important metrics and data. This approach is useful because it allows companies to provide a more holistic view of their sustainability efforts but can be difficult to manage if multiple stakeholders need to access the report. In this case, companies should consider providing different reports for each audience.

Finally, ESG reporting should cover both current and future performance by including relevant trends and metrics . Without an element of future planning, ESG reports can become outdated and irrelevant for stakeholders . To avoid this, companies should include data on long-term goals in an attempt to demonstrate commitment to sustainability.

The 6 Steps to Make an ESG Report

There are several steps to take in order to make an ESG report:

  • First, gather information from the company’s leadership on what they consider exists within their sphere of influence and identify the company’s value chain.
  • Second, identify and categorize risks and opportunities that could affect the performance of the company along its value chain.
  • Third, write a report outlining these risks and opportunities to communicate them to stakeholders.
  • Fourth, decide how frequently reports will be made.
  • Fifth, make the follow-up process manageable for employees by figuring out what information needs to be collected and by whom.
  • Sixth, make an action plan for how these risks and opportunities will be dealt with at the company.

What Information Must Be Included in an ESG Report?

ESG reports should include information on environmental performance such as energy use, greenhouse gas emissions, water usage , waste generated, material used, and waste management.

They should also include information on social aspects such as labor practices, human rights impacts, community engagement, diversity efforts from suppliers, and any other issues related to the company’s interactions with society.

Lastly, reports should include information on governance such as compliance, board structure including diversity of race or gender of the board members , political contributions, policies related to the environment and society, and any other issues regarding how the company interacts with government.

ESG Reporting as a Tool for Companies

ESG reporting is an opportunity for companies to communicate sustainability goals to stakeholders in order to understand their business from a holistic perspective. By communicating these goals, it helps foster relationships with investors and stakeholders. The idea is that as a company works towards its goals, it can be held accountable to these goals and improve over time. The end goal is to contribute to the company’s long-term success.

ESG reporting is also a tool for companies who want to attract talent from outside their industry. It is a way for companies to showcase their efforts in environmental and social responsibility, which is becoming increasingly important when recruiting new employees.

Finally, ESG reporting is a way for companies to communicate how their efforts and goals fit into a larger scope of social and environmental issues facing society. The end goal being to be sustainable.

Getting Started with Global Reporting Initiative

There are many ways in which companies can get started with ESG reporting. Many use their annual sustainability or corporate social responsibility reports as a starting point for adding ESG data into these reports .

Other companies choose to create an entirely new report that is used only for the purpose of ESG reporting. This approach has the benefit of giving employees dedicated time and space to focus solely on ESG issues.

Regardless of which approach a company takes, the goal should be to create an article that is relevant and useful for its intended audience. For example, if a company decides to add ESG information into their annual sustainability report , they will want to make sure the data and content is relevant and useful for their stakeholders.

In Summary of Sustainability Accounting Standards Board

Conversely, if they are creating a new report for ESG reporting , they will want to make sure it is something their intended audience cares about.

When deciding on frequency of the reports, companies should look at what information is most relevant for each purpose. For example, if employee engagement is important, making an ESG report available quarterly may be most effective. However, if stakeholder engagement with the report is more important, making it available monthly or annually may work better.

Once a company has decided what information will be included in the ESG report, they need to decide who is responsible for collecting this data and how frequently that person needs to update the article.

Lastly, companies will need to decide how they want to communicate this information. For example, do they want their ESG report available on their primary corporate website or through an external portal such as Global Reporting Initiative?

Caveats and Disclaimers and climate related financial disclosures

We have covered many topics in this article and want to be clear that any reference to, or mention of climate related financial disclosures, sustainability accounting standards board, esg reporting process, reporting frameworks, esg disclosures, esg reports, esg factors, task force, sustainability reports, financial statements, private companies, reporting framework, risk management, other stakeholders, environmental social and governance, environmental sustainability, annual report, corporate governance, public companies, corporate sustainability, esg performance, esg information, reporting standards, third party assurance, esg topics, world economic forum, business model, non financial information, quantitative metrics, financial performance, reporting requirements, track progress, investor relations, company’s approach, esg journey, related financial disclosures tcfd, relevant information, multiple frameworks, public company, different companies, climate change, existing standards, social and governance esg, force on climate related, task force on climate, many companies, united nations, business case, reporting, material issues, tcfd framework, company, human rights, long term strategy, metrics, industry, gri standards, disclosures, business, disclosure, governance, sustainability accounting standards, focus or governance esg in the context of this article is purely for informational purposes and not to be misconstrued with investment advice or personal opinion. Thank you for reading, we hope that you found this article useful in your quest to understand ESG.