ESG is the term on everyone’s lips, and though debates swirl about investor interest in it, we’re here to clear the air. We’ve witnessed firsthand how crucial ESG is—it's a recurring topic at AGMs and IR meetings, with a staggering 89% of investors factoring it into their investment strategies. Nailing ESG reporting is pivotal but challenging.
So, we've compiled key questions and themes we frequently encounter regarding ESG reporting.
Q: Why is integrating ESG into the organisational core critical?
A: ESG should be hardwired into your company's strategy, shifting the focus from a marketing incentive to being at the organisational core. It is not a checklist but an impact reporting tool, which emphasises the ability to unlock performance. In short, a solid ESG approach is good for business, and can improve relations with your shareholders - especially with the rise of eco-conscious investors.
Companies who have excelled in their ESG reporting, such as outdoor clothing brand Patagonia, have done so by integrating their ESG reporting into their overall strategy and taking a holistic approach.
Q: How can companies create a more human-centric approach into their ESG reporting?
A: Companies can humanise ESG reporting by contextualising data. Instead of just presenting numbers, they can tell stories of how their initiatives positively affect individuals, communities, and the environment. This narrative-driven reporting resonates more deeply with stakeholders, bridging the gap between compliance and genuine impact.
Q: How should companies approach ESG reporting to investors?
A: Companies should adopt a strategic, nuanced approach, emphasising honesty and realism. Instead of painting an idealised picture, they should showcase progress while acknowledging areas for improvement. This balanced approach builds investor confidence and fosters long-term trust. Aim for progression, not perfection.
Q: How should organisations navigate the selection of ESG reporting frameworks?
A: Organisations should start with risk assessments to identify their specific ESG priorities. While foundational frameworks like the UN Global Compact provide a solid base, emerging frameworks like TNFD offer specialised guidance, ensuring a comprehensive approach tailored to specific risks and opportunities.
Q: What's the primary goal of effective ESG reporting?
A: ESG reports often aren't regulated or part of the audited financial statements, creating space for unverified claims that clash with the rigor of audited financial reports. So, one of the main goals of effective ESG reporting is to build trust among shareholders and stakeholders.
By prioritising this, companies show accountability and dedication to progress. This creates accountability, drives data driven decision making and promotes lasting sustainable practices within the organisation.
For more insights and advice on unlocking the power of ESG reporting, watch our latest webinar featuring Chief Business Strategy Officer at Lumi, Sylvie Harton and Head of Sustainable Business & ESG Advisory Practice, DWF Law, Tracey Groves on demand now.
