Globally, organisations have realised why ESG adoption is critical to delivering sustainable growth in the short and long term. We have seen organisations set targets and begin to drive their ESG agenda from a strategic perspective.
While organisations have begun to invest in their ESG strategy, they should pay equal attention to ESG reporting. A recent article in the Economist titled ‘three letters that won’t save the planet’ points to the critical role of clear and consistent disclosures in ESG reporting to solve pressing challenges like the environment.
Therefore, organisations should approach ESG reporting deliberately to ensure that they can build trust with their stakeholders, promote increased transparency in their reporting, communicate comprehensively on the top risks and opportunities facing their organisation and thereby increase the overall value for their stakeholders.
To achieve this, organisations should implement ESG reporting across three phases.
The first phase is to have a well-defined ESG reporting strategy. It enables organisations to define their reporting ambition in the context of their market positioning, stakeholder demand and regulatory landscape. An ESG reporting ambition could range from basic compliance to market leadership.
This way, an organisation can perform a gap analysis between the status quo and its defined ESG reporting ambition.
The result is an articulation of the opportunities for the organisation within ESG reporting that raises stakeholder confidence and engagement. The second phase is the implementation of the defined ESG reporting strategy.
Using the implementation plan, organisations should create an environment conducive to ESG reporting integrated into the organisation’s culture, internal policies and structures.
An organisation should provide investments to increase management capabilities and ESG-relevant tools to optimise decision-making on strategic ESG objectives.
Also, an efficient and data-enabled reporting process that focuses on and encourages achieving sustainability targets within the organisation should be made available.
The third phase requires organisations to embed ESG data and develop the ESG report. Organisations should disclose their performance against set ESG sustainability targets and provide clear and consistent communication on the value created from their sustainability or ESG strategy.