A guide to performing an ESG reporting readiness assessment
Organisations have often tried to begin reporting on complex sustainability areas without addressing their business's operational aspects, leading to poor reporting and implementation.
Once an organisation has developed its implementation plan and timeline for integrating sustainability, from strategy to operations, it is critical to perform a reporting readiness assessment to evaluate the ability of the current structures to meet the new reporting demands as sustainability is integrated across the organisation.
The readiness assessment enables an organisation to plan resources and investments better based on an informed decision on process, systems and operational gaps that need to be fixed as the organisation embarks on its ESG reporting journey, moving from compliance to becoming a market leader.
Failure to perform this assessment often leads to ineffective reporting, whereby an organisation is creating a significant positive impact for stakeholders through the execution of its ESG-enabled strategy but does not capture this in its ESG reporting in a manner that provides a relevant and comprehensive view on the value its creating and the competitive advantage this provides.
A typical ESG reporting assessment should include the following.
First is a good understanding of the key performance indicators (KPIs) and required metrics the organisation should prioritise.
Organisations usually have several metrics and KPIs. However, it is critical to identify those relevant for reporting because they meet stakeholders’ reporting expectations about the organisation.
The second relates to the first and involves determining the data requirements for the selected metrics or KPIs. The data required for disclosures in an ESG report is fundamental.
Therefore, this ensures a data strategy on what data is needed, whether it is currently available or not, and where it resides within the organisation.
Thirdly, organisations should consider required changes to their current operations and processes to accommodate the new reporting requirements for ESG.
It will ensure the reporting process is seamless and integrated into the organisation’s governance structure with clearly defined roles and responsibilities.
Finally, organisations will have to consider the involvement of their internal audit teams and independent external assurance providers as part of the reporting process to improve the reliability of the ESG reports.
