Latest Trends in ESG Sustainability ReportingAugust 27, 2021
If you want your company to flourish, growing from one success to another, it is paramount to embrace ESG sustainability reporting. Although a relatively new discipline, there are some companies that were focused on sustainability, and regularly produced related reports, such as corporate sustainability reports.
However, ESG sustainability is slightly different because the guiding principles are not the same and the targeted audiences are specific stakeholders. In this post, we take a closer look at the latest trends observed in ESG reporting.
More Investors are Putting Effort into ESG Sustainability Reporting
When the process of ESG reporting commenced, the target was all the stakeholders for a company, including communities, business partners, clients, and investors. Now, the primary target is emerging as the providers of capital.
To help investors get the information they want, and make the right decisions, capital markets are stepping in and adding ESG sustainability reporting as an important component of listing.
For example, the Hong Kong Stock Exchange now requires all companies that are listed there to produce annual ESG sustainability reports. Other exchanges that have also put sustainability as an important component in their reporting include New York Stock Exchange, NASDAQ, and London Stock Exchange.
So, if you have or manage a company that is considering listing or is already listed, the chances are that ESG sustainability reporting is going to be one of the requirements. So, it will be a good idea to start crafting a roadmap for sustainability and adopt an appropriate framework for ESG reporting.
The Number of Companies Doing ESG Reporting has Grown Exponentially
For years, the focus on ESG reporting was largely on multinational publicly traded firms and medium-sized firms in the extractive industries. However, more companies are now joining the list of companies reporting on sustainability to enjoy related benefits. Again, pressure from stakeholders has left them with no other option but to operate responsibly, and craft strategies for addressing ESG-related issues.
Now, even small firms are indicating that their efforts need to be appreciated, and the only way to do this is through ESG sustainability reporting. Note that this is not just any other type of reporting, but an accurate presentation of a company’s environmental and governance impacts to stakeholders. Also, this report must have accurate data to help stakeholders make the right decisions about the firm.
The Conversation about ESG Reporting is Dominated by Climate
Some of the major risks facing the globe today are global warming and climate change. Now, the reporting frameworks are requiring companies to highlight their carbon footprints and craft strategies for changing them. Particularly, they have to demonstrate how they plan to promote a low carbon economy. In 2019, about 47% of the companies on the USA 500 Index mentioned or aligned their disclosure with TCFD (Taskforce for Climate-related Financial Disclosure) framework. This was a large jump from the 25% reported in the previous year.
Some of the strategies adopted by companies to address climate change include better maintenance of their facilities to increase the efficiency of their machines, changing their machines to modern ones, and adopting eco-friendly energy sources. Some are also supporting initiatives that promote a green planet for faster uptake of harmful gases from the atmosphere.
Companies are Expanding their Time Limits for Sustainability Focus
One common attribute about sustainability reporting frameworks is that they require companies to imagine environmental, social, and corporate issues in the future. This way, they are able to plan accordingly and embed the details in every aspect of their operations. In line with this, the companies are setting targets for the next 10, 20, 30, or more years. As they anticipate future risks and opportunities, they are able to adjust their strategies well, raising the chances of long-term success.
As more enterprises adopt ESG reporting, new trends are likely to emerge. However, your goal as a manager or entrepreneur should be following the process correctly and generating accurate reports for targeted stakeholders. This is why you need to work with the right sustainability reporting software. One of the tested and trusted options is Diginex.