The world is changing rather fast. Unlike in the past, stakeholders, from customers to investors, now demand that your brand be responsible for all its actions if you want to get them to buy, invest, and work with you. This is why ESG sustainability reporting has become so critical for all businesses. So, how does ESG reporting work?
ESG (environmental, social, and environmental) sustainability reporting is the disclosure process of the impacts that a company makes in the course of its operations. The reporting has become the norm, with more institutions and regulatory authorities demanding a thorough process by companies within their jurisdictions.
A good example is the Hong Kong Stock Exchange, which requires all listed firms to provide detailed ESG reports capturing their future risks and how they expect to address them.
One fact about ESG reporting is that it comes with some costs. Indeed, some companies highlight this as a major obstacle in their sustainability efforts. Others have even pointed it out as a cost that can be avoided, but these are misconceptions. As we are going to demonstrate, ESG sustainability reporting will make a case for the costs and further open the enterprise for success.
What is the Process of ESG Sustainability Reporting
Before we can look at how the ESG process justifies the cost, let’s understand the process. To run a successful ESG reporting process, here are the main procedures:
- Establish: This is an assessment of a company’s procedures to identify risks and opportunities for action. At this point, you also engage stakeholders to establish what they want. Well, ESG sustainability reporting is all about the stakeholders and you need to put them at the core of the process.
- Design and implementation: This is another crucial stage where you craft a strategy for action. Depending on the stakeholder’s preference, you might want to promote gender parity, cut down emissions, or focus on conservation.
- Gather data and create your report: Once you set the ball rolling, it is time to gather data and ensure that key performance indicators are being met. Remember that to enjoy all the benefits of sustainability reporting; the data has to be accurate and verifiable. As you create the sustainability report, ensure it is easy for stakeholders to read and understand so that they can make correct decisions.
How ESG Reporting makes a case for the Costs
While it is true that the above process requires enough funds, it is a justifiable process. Actually, you should consider it another primary process of the business, which is very important in defining its success. Here is how to go about it:
- Use Materiality Assessment to Make a Case for ESG Reporting
When commencing the process of ESG sustainability reporting, carry a comprehensive materiality assessment, which increases engagement with stakeholders. From shareholders to investors and customers, they will tell you what they prefer. If they prefer cutting down emissions or treating waste, costs for these activities will be justified.
- Ingrain ESG Reporting into the Long Term Planning of the Company
For most companies, ESG reporting-related costs appear high because they are looked at from the short-term. However, this is the wrong way to do it. Instead, you should think about the benefits of ESG sustainability reporting in the long term. For example, what are the risks and opportunities of ESG sustainability reporting in the next five, ten or twenty years?
- Use Sustainability Management Software to Simplify and Cut Down the Costs
Now, this is another angle. Even as stakeholders approve the spending for ESG reporting, you can still push the cost down. The best way to do this is using ESG sustainability reporting software. A good program makes it possible to collect data on time, follow the right procedure, and generate top-quality reports.
As you can see, the notion of costs when it comes to ESG reporting is crucial, but you should not think of it as a standalone process. Instead, you need to think about it as a crucial part of the organization.