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As the planet see ever-more-significant impacts from Climate Change, the concerns are rapidly shifting from we’ll deal with it “next century” to we need to start mitigating and redirecting resource and efforts NOW. Because of the impacts on weather, wildlife, and water quality & quantity, Investors are looking for better disclosure of how companies are of like mind. This concern is percolating up from individual investments to major investment funds, pensions funds, institutions, and governments.
Recently ESG disclosure has become desirable and quickly becoming mandatory disclosure for organizations and public companies.
Organizations are adjusting their business models, re-organizing corporate structures, and spending substantial time, money and resources to embed sustainability into core strategies. As a result of this investment, many have come to see environmental, social, and governance (ESG) reporting, not as a regulatory burden, but as a tool to attract investors and financing. And conversely, a lack of such reporting may bar entities (public, private, or non-profit) from accessing capital to sustain or grow.
ESG reporting is the disclosure of environmental, social and corporate governance data and analysis. As with all disclosures, its purpose is to shed light on a company’s ESG activities while improving investor transparency and inspiring other organizations to do the same. Reporting updated over time is an effective way to demonstrate that stated goals are being met and that your ESG projects are genuine — not just greenwashing, empty promises, or lip service.
What do ESG reports include?
ESG reports include qualitative and quantitative information pertaining to its three key topics.
What is an organization doing to be a steward of the environment? The environmental umbrella covers:
- How a company is combatting climate change
- What a company is doing to reduce carbon emissions
- How the company is preserving biodiversity, improving air and water quality, combatting deforestation, or responsibly managing its waste
- How the company is responsibly using resources and its supply chain
What is an organization doing to improve lives? The social umbrella covers:
- How a company nurtures its people and workplace
- Gender, BIPOC, and LGBTQ+ inclusivity initiatives
- The company’s employee engagement
- Data protection and privacy
- Community involvement
- Human rights and labor standards
What is an organization doing to stay ahead of corruption and ensure its investments remain sustainable in the future? The governance umbrella covers:
- A company’s internal controls
- Policies, principles and procedures governing leadership, board composition, executive compensation, audit committee structure, shareholder rights, bribery, lobbying, political contributions, and whistleblower programs
Implementation of Reporting
Reporting can be included in
- Annual Reports (investor reports)
- Public filings and documents
- Proposals and RFPs
- Website (public and/or internal intranet)
A website is ideal because
a) it’s public and makes corporate statements transparent to employees, customers, and investors alike. and
b) it can be quickly updated as gaps in reporting become evident or as company policies evolve in response to new issues, world events, and opportunities, or as disclosure standards evolve.