ESG Reporting – What it is and how to properly prepare it?
In today’s world, where social responsibility and environmental care are becoming key elements of business operations, ESG reporting is gaining significance. But what exactly does this term entail, and how does it differ from CSR? How can you create a good ESG report?
ESG Reporting vs. CSR
While CSR (Corporate Social Responsibility) focuses on the overall responsibility of companies for their impact on society, ESG (Environmental, Social, Governance) is a more detailed approach. It centers on three specific areas: a company’s impact on the environment (Environmental), social relationships (Social), and management practices (Governance).
The Obligation of ESG Reporting
In an increasing number of countries, there is a trend to introduce mandatory ESG reporting. This move responds to the growing societal and investor expectations, who want to ensure that the companies they invest in operate responsibly. Although this obligation mainly concerns publicly traded companies, many other entities also choose to report in this manner to demonstrate their responsibility and transparency in operations
Who needs to report on ESG and when are the reports due?
ESG reports are primarily required from publicly traded companies. However, other businesses, due to the nature of their operations which significantly impact the environment or society, often undertake this task. The deadlines for submitting reports depend on the specific regulations of a given country. In many jurisdictions, annual deadlines are in place, with the report for a particular fiscal year typically submitted at the beginning of the following year.
How to Prepare an ESG Report?
- Understanding ESG areas: ESG focuses on three main areas: the environment, social relationships, and management practices. Each has its own specifics that must be reflected in the report.
- Data collection: Systematic data gathering concerning ESG activities is essential for a complete and credible analysis.
- Analysis and evaluation: After collecting the data, it’s crucial to analyze them in the context of industry standards and the company’s challenges and opportunities.
- Stakeholder communication: Your report should be clear and transparent so that all interested parties can understand the company’s ESG actions.
- Setting an action plan: Based on the analysis and evaluation, establish a plan for the future to have an even more positive impact on the company’s three key areas of operation.
Modern ESG reporting isn’t just an obligation but primarily a strategic tool. A good report indicates that the company is aware of its impact on the surroundings and actively strives for improvement. This ensures greater stakeholder trust and a positive company image in society.
If you need support, consultation, or would like to learn more about how our tool can assist your company in ESG reporting, please contact us! We’re here to help.