Post by account_disabled on Feb 27, 2024 6:10:04 GMT -5
Transparency laws on ESG reporting, which monitor companies' environmental, social and governance performance, are coming. According to TriplePundit , the US Securities and Exchange Commission (SEC) is working on a new rule that will require companies to provide accurate data on how climate change could affect a business.
For its part, Europe has announced new requirements for how banks must report environmental risks and carbon targets. These initiatives are just the tip of the iceberg as regulators around the world are actively creating new legislation to increase clarity on ESG issues.
Transparency in ESG reports will be essential
Although it will take time to refine regulations, and there is still no universal metric to evaluate results, it does not mean that we have to wait to improve transparency in ESG reporting, as this goes beyond the authorities.
For example, 74% of consumers say they Chinese American Phone Number List choose, switch or avoid brands based on their stance on social issues, while 85% of investors take ESG factors into account in their decisions.
Transparency in ESG Reporting, is it really achieved?
Therefore, companies will need to refine their disclosure strategy as soon as possible since it is time to control their data, before an avalanche of impositions makes them work under pressure.
4 steps to a better sustainability report
With these four steps, companies will ensure that ESG reporting transparency is not a problem in the short term:
1. Understand why ESG is reported
There are a variety of reasons to showcase ESG initiatives, with many corporations considering these aspects core to their values, while others seek to satisfy investors and shareholders, or do so to mitigate risk. Whatever the reason, the first step is to understand the reason for the disclosures, as this will shape the strategy.
2. Choose the information to disclose
To do this, you must focus on the most significant metrics for priority stakeholders – whether employees, customers, the board of directors, investors or regulators – these must be aligned with business values and strategy.
If the company is committed to environmental care, for example, it will have to talk about energy efficiency, air and water pollution, and greenhouse gas emissions.
transparency in mandatory reporting
In addition, it will be necessary to look at how other corporations in the sector do it to facilitate the comparison of results, another point is to measure ESG performance throughout the supply chain , however, regardless of the metrics, it will be required that the claims can withstand scrutiny, as stakeholders and auditors will more frequently fact-check public statements.
3. Decide on information frameworks
Nonprofits, business groups, and other associations have created dozens of reporting frameworks to guide companies on what ESG metrics they should measure and how to do so.
It should be noted that there are three popular frameworks, these are the Global Reporting Initiative, the Value Reporting Foundation and the Task Force on Climate-Related Financial Disclosure.
transparency in reporting of that framework
Each group has its own agenda, meaning that some instruments focus on environmental figures, while others focus on social issues. Since no framework covers all aspects of ESG, many companies decide to use them to create their own.
4. Take advantage of technology
ESG reporting is a complex task that cannot be managed effectively using spreadsheets. Manually collecting data—on carbon footprint and water use, diversity and inclusion, ethical labor practices, etc.—that may reside in many places in the organization and supply chain is nearly impossible.
Integrated software simplifies this process by bringing together critical data in real time, making it quick and seamless to build reports, make decisions, and communicate ESG efforts in a credible and consistent way.
For its part, Europe has announced new requirements for how banks must report environmental risks and carbon targets. These initiatives are just the tip of the iceberg as regulators around the world are actively creating new legislation to increase clarity on ESG issues.
Transparency in ESG reports will be essential
Although it will take time to refine regulations, and there is still no universal metric to evaluate results, it does not mean that we have to wait to improve transparency in ESG reporting, as this goes beyond the authorities.
For example, 74% of consumers say they Chinese American Phone Number List choose, switch or avoid brands based on their stance on social issues, while 85% of investors take ESG factors into account in their decisions.
Transparency in ESG Reporting, is it really achieved?
Therefore, companies will need to refine their disclosure strategy as soon as possible since it is time to control their data, before an avalanche of impositions makes them work under pressure.
4 steps to a better sustainability report
With these four steps, companies will ensure that ESG reporting transparency is not a problem in the short term:
1. Understand why ESG is reported
There are a variety of reasons to showcase ESG initiatives, with many corporations considering these aspects core to their values, while others seek to satisfy investors and shareholders, or do so to mitigate risk. Whatever the reason, the first step is to understand the reason for the disclosures, as this will shape the strategy.
2. Choose the information to disclose
To do this, you must focus on the most significant metrics for priority stakeholders – whether employees, customers, the board of directors, investors or regulators – these must be aligned with business values and strategy.
If the company is committed to environmental care, for example, it will have to talk about energy efficiency, air and water pollution, and greenhouse gas emissions.
transparency in mandatory reporting
In addition, it will be necessary to look at how other corporations in the sector do it to facilitate the comparison of results, another point is to measure ESG performance throughout the supply chain , however, regardless of the metrics, it will be required that the claims can withstand scrutiny, as stakeholders and auditors will more frequently fact-check public statements.
3. Decide on information frameworks
Nonprofits, business groups, and other associations have created dozens of reporting frameworks to guide companies on what ESG metrics they should measure and how to do so.
It should be noted that there are three popular frameworks, these are the Global Reporting Initiative, the Value Reporting Foundation and the Task Force on Climate-Related Financial Disclosure.
transparency in reporting of that framework
Each group has its own agenda, meaning that some instruments focus on environmental figures, while others focus on social issues. Since no framework covers all aspects of ESG, many companies decide to use them to create their own.
4. Take advantage of technology
ESG reporting is a complex task that cannot be managed effectively using spreadsheets. Manually collecting data—on carbon footprint and water use, diversity and inclusion, ethical labor practices, etc.—that may reside in many places in the organization and supply chain is nearly impossible.
Integrated software simplifies this process by bringing together critical data in real time, making it quick and seamless to build reports, make decisions, and communicate ESG efforts in a credible and consistent way.