‘Many such corporate reports explain how a company measures ESG performance, sets goals, and manages programs effectively – and then communicates their impact to stakeholders.’
One of the key trends these years is the development and attention on ESG reporting and disclosure. Issues relating to ESG, sustainability, corporate purpose, culture, and stakeholder interests have joined corporate governance at the centre of the dialogue between investors and portfolio companies.
Many are strongly believing that companies must proactively manage this important two-way communication with their investors, listening carefully, engaging in a substantive dialogue about business performance and strategy and shaping their response to meet investor expectations, according to the Institutional Investor Survey 2020 by MORROW SODALI.
ESG Reports has been the main source for stakeholders to gain ESG information of the company from the inside. There are multiple ESG Reporting Frameworks, ESG Ratings, ESG Disclosure Standards, In-house ESG Reporting available for the current ESG Reporting field, which provides great indicators for stakeholders and shareholders to validate the ESG progress of the company.
This report presents a bird’s-eye view to exam the current ESG Reporting market and insights on how to improve ESG Reporting Standards.
here are some top recommendations we proposed for your next ESG reporting:
Tailored Industry-specific reporting methods.
Tailored Company-specific (Case by case disclosure) reporting methods.
Relevant to the market (relative to an index and region to ensure that the rankings are relevant to the market that the public company operates in, meanwhile, reflecting the relevant regulations and institutions the target business operates in).
Investors & Shareholders-centric reporting style.
Integration of Financial Performance, with clear connections to the financial statements published regularly.
Calculations on green profit or newly invented Hybrid Metrics where applicable.
Transparency in ESG performance, with clear action plans and monitoring team in place.
Addressing actual targets or results.
Clear connections to financial risks/opportunities.
Greater clarity around the process by which companies identify risks and opportunities
Showing the ability to integrate different ESG Reporting Standards.
Format: presentation (Standardized Format & Indicators to compare and reduce the cost of knowledge, plus visual: one-screen info).
Illustrate the stakeholder engagement approach and outcomes and evidence of a link between pay incentives and corporate purpose when explaining corporate purposes.
A majority of respondents (institutional investors) indicated climate change and human capital management as engagement priorities among all the ESG issues in a recent survey.
Stay current & relevant to the rapidly changing environment. Be flexible to change while making the process simpler for monitoring purposes and increasing accessibility.
Updates on the latest ESG reporting trends
Reported by Harvard Business Review on Dec 3, 2020. The current challenge facing in ESG reporting among others is that no universally adopted standards for how companies can measure and report on their sustainability performance.
Exciting news from the accounting community is that the IFRS foundation that oversees the IASB (International Accounting Standards Board) is planning on revolutionizing the current sustainability reporting system using its expertise in the standard-setting process and its legitimacy in the corporate and investor community. This means the IFSB can easily gain support from regulators all over the world with its expertise to make integration of ESG reporting with financial reporting possible.
It is predicted that once adopted, investors and other stakeholders will suddenly have a much clear view of any company’s sustainability performance, just as they do its financial performance. To make uniformities in ESG reporting out of the complexity and confusion for companies and investors in the currently existing systems created by most NGOs (Non-Governmental Organizations) working independently in developing standards for sustainability reporting.
To read the full report, please click here!
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