Sustainability has become a crucial pillar in defining business success today. No matter your industry, from banking to manufacturing, more stakeholders, including clients and development partners, are demanding that operations must be responsible and ethical.
To win their support, trust and commitment, your business is required to be sustainable and prepare top-quality environmental, social, and governance (ESG) reports and publish them, which can be a herculean task.
Failure to follow the recommended procedures for sustainability or ESG reporting has resulted in rising cases of greenwashing. This post reveals some of the dangers that come with greenwashing, and how you can use sustainability or ESG reporting consultants to stand out.
Read through the post to learn more, including how you can optimize the benefits of ESG reporting.
What is ESG Reporting?
ESG reporting is the disclosure of a company’s performance in three core areas, environment, people, and governance. The sustainability or environmental, social, and governance (ESG) disclosure or reporting gives stakeholders the information they need to make informed buying or investing decisions.
It also comes in handy in ESG rating because most rating organizations or firms use data from ESG reports to rank companies.
One notable thing about ESG reporting, which apparently makes it even more challenging for the management teams of companies, is that it is a process. Indeed, even the final ESG report that stakeholders get is only part of the long chain of actions.
For example, your company’s decisions need to be balanced so that you do not adopt good social policies but still emit a lot of waste into the environment. This is one of the reasons why you need to work with ESG reporting consultants.
When done well, ESG reporting becomes a crucial stepping stone to taking your company or business to the next level. It also helps to ensure that every party in your management team is committed to helping the company grow and address the challenges facing the planet.
The Danger of Greenwashing in ESG Reporting
Greenwashing is an incorrect presentation of sustainability or ESG information about a company to stakeholders. If the information is not accurate and verifiable, it is considered greenwashed and could easily work against the goals of companies to become sustainable brands. If proven to be deliberate, the risks can be more severe for the involved company.
To avoid this risk, smart business managers seek advisory or help services of sustainability consulting.
The following are some good examples of dangers related to greenwashing company ESG reports.
- Recently, the investment management branch of the Bank of New York Mellon Corp was fined USD 1.5 million for giving deceptive information on how it picks ESG stocks. This also raises the risk of getting blocked from other capital markets services.
- Vale, a Brazilian mining company, was charged by SEC for including ESG information to mislead communities, governments, and investors. The report was particular about the Brumadinho dam, which killed 270 people after collapsing in 2019.
- With more capital markets and individual governments adopting policies to support ESG, incorrect ESG information or greenwashing could result in delisting. The respective company’s operating license can also be canceled, effectively forcing it to exit from a specific market.
Do not wait for these dangers to impact your company management, strategy, and success.
Go for sustainable consulting for help in the adoption of ESG plans and ESG reporting for success.
ESG Reporting Consultants can Make Your Sustainability Journey Smoother
Today, over 90% of S&P 500 companies prepare annual ESG reports and publish them for stakeholders to read. They do so by gathering and following their ESG data carbon footprint, climate change, and other attributes, and reporting to stakeholders. The companies stand to gain a lot for the development of good ESG strategies and sticking to them.
Indeed, the focus on sustainability comes with loads of benefits because both investors and customers or clients are willing to pay more for ESG products. Therefore, let ESG reporting consultants help you to get it right and enjoy all the benefits.
Here is a demonstration of how ESG reporting consultants and their advisory help to make the journey to ESG reporting smoother.
- Helping Your Team Learn the Main Steps of ESG Reporting
As we pointed out earlier, ESG reporting is a process and not a specific point or objective. This means that your company has to be able to follow every step of the ESG journey accurately and link one phase to the next for continuity.
ESG reporting consultants come in handy in calculating ESG Score + giving ESG consulting services, including the main steps to follow for ESG reporting. So, here are the main steps to follow:
- ESG review to identify key risks and opportunities. Is your company emitting a lot of emissions and accelerating climate change?
- Stakeholder engagement to establish what investors, clients, and partners, among others, want.
- Materiality assessment to identify the reporting topics. Your company might want to prioritize partnerships with companies like GreenCo and Climate Fresk to improve ESG-related skills adoption and carbon footprint reduction.
- ESG reporting plan or strategy development. This includes defining the key performance indicators.
- Data gathering and analysis. Note that data gathering should start from the first step to provide verifiable information to stakeholders.
- Report generation and review. This gives stakeholders, such as investors and clients, with information to read and make their decisions on working with you.
- ESG Reporting Consultants can Help Your Team Identify the Best Framework for Disclosure
For your ESG reporting process to be successful, it is important to also have a guiding framework, but which one do you select? The number of frameworks has been growing over time as the demand for sustainability grows. ESG reporting consultants come in handy to help your team identify all the components that are needed to prepare high-quality reports.
In addition to picking the right framework, such as the Global Reporting Initiative (GRI) and the Task-force on Climate-related Financial Disclosures (TCFD), the experts will also tell you the right programs to work with for data collection and analysis.
- Optimizing the Benefits of ESG Reporting
Preparing ESG reports might come as a regulatory demand or company’s internal goal to help address the planet’s challenges. The good thing is that you can work with ESG reporting consultants to benefit more from the process.
The professionals will help you or provide a guide to use the reports for improved ESG score, building partnerships, and standout in marketing. These might be all that you need to make the company more successful.
- Cutting the Cost of ESG Reporting
To accurately report on your company’s ESG efforts, some costs have to be involved. This could come in the form of training, equipment acquisition, and software subscription. If you need to change the suppliers or product design, more costs could come your way. To keep these costs low, you need to work with ESG reporting consultants.
The experts help your company not only conceptualize the whole idea of ESG reporting and ESG scores but also in doing it accurately. If the goal is cutting down the carbon footprint with the ultimate focus of achieving net-zero carbon emissions, a strategy such as working with GreenCo and breaking down the process into phases of five years will be recommended.
This would allow you to work on a specific item this year and keep reducing the carbon footprint in the subsequent reporting phases.
The highlights in this post only capture a small portion of what you should anticipate from working with ESG reporting consultants. In addition, they help to equip your team with the required skills for promoting sustainability, better staff retention and brand strengthening.
No matter what ESG reporting and ESG scoring needs you have, know that the experts will be there to make the journey smooth and enjoyable. Contact us, the best ESG reporting agency for help in calculating ESG Score + giving ESG consulting services.