As environmental, social and governance (ESG) disclosure becomes more mainstream, many companies are beginning to issue dedicated reports to explain where they are on their ESG journey and address questions from their stakeholders ― in particular response to the increasing demand from investors for ESG disclosures.
Developing and issuing your first report requires a lot of thoughtful internal organization and alignment, but you can follow these 5 steps to prepare:
- Decide what you want your report to accomplish. The objectives of your first report will vary, but there are several that may apply to where you are in your ESG journey:
- Communicate your established ESG strategy and how it aligns with your overall business objectives
- Outline the ESG policies, procedures and programs you have in place
- Provide an update on your ESG goals, progress and metrics
- Identify ESG issues that matter most to your business and stakeholders, and demonstrate your engagement in these areas
- Drive company-wide buy-in for “the business case” for ESG and draw the connection to your bottom line
- Develop a realistic reporting roadmap. ESG reporting is a journey. Focus on a reasonable reporting cadence that you can commit to ― a phased approach to ESG reporting allows you to take measured steps along the way. Consider starting with a biennial report with intermittent updates via your website and social media channels. Perhaps your roadmap could include business- or location-specific reports on an intermittent basis, or the creation of a dedicated microsite that houses refreshed content between formal reporting periods. In the absence of regulatory reporting requirements, companies can design a reporting roadmap that suits their needs. Whatever you choose, your first report is a major accomplishment and serves as the start of a cascade of ESG communications.
- Reference relevant examples, best practices and voluntary disclosure frameworks. A good place to start your journey is to identify other organizations that have recently started ESG reporting (which may mean looking outside your peer base). Such examples are a web search away, under “first sustainability report.” Additionally, even if your peers are further along with their reporting, review their ESG communications to understand industry best practices and expectations. And, finally, there are several voluntary disclosure frameworks that serve as excellent starting points, even if you decide not to follow through on full reporting to any particular standard. The most notable frameworks are:
- Global Reporting Initiative (GRI) – consists of the first, most widely adopted and most comprehensive global standards for sustainability reporting
- Sustainability Accounting Standards Board (SASB) – provides 77 sector-specific sustainability accounting standards for company use in communicating financially material sustainability information to their investors
- Task Force on Climate-related Financial Disclosures (TCFD) – develops recommended climate-related financial risk disclosures for use by companies in providing information to investors, lenders, insurers, and other stakeholders
- Challenge yourself to think about the bigger picture. Don’t be surprised if the ESG reporting process opens your organization to more macro-conscious thinking about your organization’s role in the world and its opportunities for improvement. Transparency is key to building credibility in ESG communications ― and stakeholder expectations for a fuller understanding of risks and opportunities continue to grow. Just as important as highlighting your ESG accomplishments is the recognition of progress that still needs to be made and the broader ESG issues that may impact your company.
- Plan, plan, plan! Once you are ready to begin work on your first report, take time to assess your internal resources, and assign roles and responsibilities accordingly. Make sure all relevant internal functions (including communications, investor relations, human resources, legal, compliance, marketing, operations and the C-Suite) know what their roles are. Create a timeline and budget that are realistic given the availability of internal and external resources. And don’t forget to leverage the ESG content you already have ― identify information in your existing materials to include in your report and encourage others in the organization to share what they are already doing.
Contact me to learn more about effective strategies for first-time ESG reports.