For organizations today, environmental and social governance (ESG) reporting is quickly becoming essential. Being a good corporate citizen and acting responsibly in relation to the environmental and social consequences of your business operations has always been important. However, the price of neglecting these responsibilities is skyrocketing today. Companies that fail to consciously take steps to set out, track and report on their ESG activities are gambling with their own futures. Integrating ESG into your annual reporting is also an effective way to demonstrate your commitment to these issues. The ESG reports of over 90% of S&P 500 companies were publicly available in July of 2020. ESG reporting plays a crucial role in today’s globalized business world and is rapidly becoming a key differentiator for those looking for investment.
To effectively implement an ESG framework, there are many options to consider. Currently, there is no single standardized format or framework for ESG reporting. It’s up to each organization to choose a framework that suits their long-term goals and the needs of their industry and operating environment. Choosing a framework and figuring out how to implement it can be daunting. Before deciding which framework to use and how to implement it, organizations need to ask a few specific questions.
Which aspects of ESG are most relevant to my company’s operations on the ground?
ESG stands for “Environment, Social, and Governance”. Depending on your company’s unique operations and/or industry, some ESG factors will be more relevant than others. Reporting requirements for ESG may also vary from industry to industry based on your location and the government requirements you need to meet. There may also be social pressure to prioritize certain aspects of ESG reporting. Are you likely to be required to consider one or more metrics in the future? Each of these factors must be taken into account when choosing a framework. Today’s frameworks have different strengths, and they benefit companies differently.
Framework selection should include specific considerations for your business. Let us say, for example, your ESG priorities skew toward environmental reporting. The TCFD framework aims to deal comprehensively with environmental reporting. The framework, however, would not be the best address ESG concerns related to social and governance issues.
Is this framework complicated to implement in my day-to-day operations?
Perhaps the most significant aspect of the process is implementation. The purpose behind why a framework is selected can often prove useless when deployment is poor. The reporting styles of different frameworks differ, and some are easier to use and implement than others. If you choose the wrong framework, adding reporting operations to your logistics could cost you much more time and money than you initially planned. GRI, for example, is a very well-established reporting framework with a broad scope and depth. But it also has a complex navigation system. In the case of GRI, the comprehensive scope comes at the cost of less reporting agility. Therefore, you should consider this when selecting a framework.
How do you plan to integrate ESG findings into your operations?
There are two sides to the ESG reporting process. In addition to adding value to your company’s public perception, ESG reporting also carries a responsibility to act upon its findings. Therefore, implementing systems to deal with issues uncovered by ESG reporting should also be on your priority list.
When evaluating an ESG framework, you should consider your current systems at the same time. It is crucial to examine whether or not those systems can respond to any changes required by ESG findings. The more comprehensive an ESG framework is, the more flexibility and agility your management systems need in identifying and implementing company-wide changes.
You may find that your organization’s information management systems are simply not up to scratch to collect and analyze the sorts of data that you need, or to easily implement changes needed to meet your ESG objectives. If you don’t already have a a centralized information management system capturing data on your operations, compliance and risk management information and ESG objectives, you’re likely going to need to implement a system.
Totum Compliance is designed to help organizations maintain their legal and social license to operate. By utilizing a well-integrated, centralized system that tracks information relating to operations, compliance and risk, decision-makers have visibility of key information and real-time performance throughout the organization. This makes tracking progress against ESG objectives and compiling ESG reports much easier.
Totum Compliance enables you to react quickly, responding to ESG findings as they arise. With this sort of operational agility, ESG reporting is no longer a chore. It becomes an opportunity to strengthen the core of your company against potential issues.
Feel free to get in touch with Totum today to talk about how our software can help you to deliver on your ESG goals.
If you would like a copy of our comprehensive ESG framework review, follow the link below.