The corporate landscape has been changed by climate change, biodiversity loss, calls for racial equality, and growing demand for better working conditions. To thrive, organisations must build resilience around greater commitments to sustainability, which is the primary expectation of every stakeholder. This is why you should adopt sustainability disclosure in your company, but what are the main ESG reporting requirements?
This post takes a closer look at environmental, social and governance (ESG) reporting to determine what it is, the benefits to anticipate, and the main requirements for your organisation.
What is ESG Reporting?
ESG reporting is a form of disclosure where an organisation accurately showcases its environmental, social, and governance impacts. The bottom line is to tell an organisation or company’s stakeholders or give disclosures about your sustainability efforts so that they can decide to buy, work with or be part of your community. Stakeholders use sustainability reports alongside financial disclosures to accurately predict the future performance and success of a company.
When starting the process of sustainability reporting, appreciate that it goes beyond simply creating a report for the company. The process of sustainability reporting for companies denotes the complete integration of sustainability into a company's operating structures. This implies that your company becomes part of a genuine drive to make the planet a better home for all by addressing challenges like global warming, climage change and human trafficking.
6 Benefits of ESG Reporting for Your Company
The growing demand for corporate responsibility from stakeholders is the biggest push forcing companies to adopt ESG reporting. The most notable of these are the emerging laws and policies in different countries. In the EU, sustainability-related laws such as Taxonomy and the Non-Financial Reporting Directive have set the pace by offering stakeholders a reliable benchmark to assess actions or risks by companies. ESG reporting can help you to comply with these regulations.
Other benefits that come from ESG reporting include:
- It helps to strengthen your brand in the market.
- Makes the company more attractive to investors.
- Sustainability and ESG reporting help to cut down the cost of operations.
- It comes in handy in building a hardworking and committed team for your organisation.
- Crucial in building long-term profitability.
Crucial Requirements for ESG Reporting
The benefits we have listed above are only a few of what you should expect. You should anticipate a lot more at the global and local level when your company becomes more sustainable. However, you need to have all the ESG reporting requirements. Here are the four most important of these requirements and how to apply them in the disclosure process.
Understanding the ESG Reporting Principles
To be able to correctly report your sustainability efforts, the first requirement is to understand the ESG guiding principles. The principles are designed to ensure that the information presented in ESG reports on corporate impacts is not only accurate but also actionable. The principles must be factored in at all stages of the ESG reporting process. These principles include:
- Materiality.
- Accuracy.
- Continuity.
- Verifiability.
- Respect for human rights.
- Responsibility.
- Precautionary approach to environmental challenges.
The Right ESG Framework
An ESG reporting framework acts as a guide for a company’s sustainability impact disclosures. Particularly, the frameworks provide a methodology for data collection, analysis and report generation. Although there are frameworks that work with most organisations, it is advisable to check for the frameworks that are designed specifically for your industry. For example, The Sustainability Accounting Standards Board (SASB) is recommended for both public and private companies in the financial industry. Good examples are financial organisations and investment funds.
Here are some of the top-rated frameworks that you should consider for your company business or corporate strategy:
- The Global Reporting Initiative (GRI).
- The Task-Force for Climate-related Financial Disclosures (TCFD).
- Sustainable Development Goals of the United Nations (UN).
- International Integrated Reporting Council (IIRC).
- The Climate Disclosure Standards Board (CDSB).
- The Sustainability Accounting Standards Board (SASB).
Good ESG Reporting Software
The process of ESG reporting is mainly about data. From the first step of reviewing a company's ESG risks and opportunities to publishing the sustainability report, it is all about data and standards of handling it. Therefore, having a good app will be one of the crucial ESG reporting requirements to be able to handle ESG data and sustainability impacts. Most companies with high ESG rating use advanced apps that work with the reporting frameworks for greater accuracy.
A good sustainability management app makes it possible to automate parts of the data gathering and analysis. For example, diginexESG and diginexCLIMATE simplify the process of ESG reporting for companies by integrating with companies’ management systems to pull out crucial data. The apps also stand out for data protection and outstanding customer support.
Understanding ESG reporting requirements is vital for managers and entrepreneurs because it forms the basis of integrating sustainability reporting into the main operations. This post has highlighted the most important requirements that you should have to get started with your ESG reporting journey. We must also indicate that if the process and requirements make reporting to appear challenging, perhaps because it is your first time or you are busy with other corporate tasks, it will be a great idea to work with an ESG consultant.
Contact Diginex.com for all the assistance you need on ESG reporting requirements and ESG sustainability management software.
