Invest in the Future: Building an Effective Environmental, Social, and Corporate Governance (ESG) Reporting Framework

Invest in the Future: Building an Effective Environmental, Social, and Corporate Governance (ESG) Reporting Framework

ESG Reporting Framework

Organizations worldwide are increasingly incorporating sustainability within their daily operations while establishing a dedicated program to monitor and track those efforts. This is not only due to the financial benefits and cost savings from adopting footprint reduction practices, but also the social component, such as the business reputation in contributing to a more ethical and environmentally friendly world. 

 When determining to invest in an organization – whether it be a through a new business or vendor relationship, or when purchasing business shares, stocks and funds  a key factor in the decision-making process is oftentimes dependent on if aspects of Environmental, Social and Corporate Governance (ESG) have been incorporated within the fabric of business operations. 

The Importance of Establishing an ESG Framework 

While ESG factors may not necessarily be a part of a financial analysis in the traditional sense, they do have substantial relevance in the financial assessment process performed by key stakeholders and investors. NASDAQ indicates that sustainability, equality, and a clean environmental record are clear indicators and an essential determining factor of an organization’s financial performance; thus, signifying the importance of incorporating practices and policies that reflect ESG standards.  

There are a wide variety of ESG criteria to consider, all of which may differ from company to company, in what they are looking for when investing in another company. For instance, from an environmental standpoint, the proper management and compliance with air, water, and waste obligations demonstrate corporate social responsibility and environmental footprint reduction efforts. Effective incident management and prevention emphasize the value of employee health and safety. The development of programs that promote diversity speak to a culture of community involvement and inclusion.  

ESG Reporting FrameworkRefocusing Priorities in 2020 

Among some of the key operational drivers in establishing an effective ESG reporting framework include internal changes – a shift in leadership, a merger or acquisition, or simply a renewed focus on ESG and sustainability programs. Other drivers include external requests and audits from investors and 3rd party vendors, or ensuring adherence to SASB Midstream standards. 

According to InvestorPlace, evaluating a company’s ESG portfolio is becoming more of a commonplace approach when it comes to investing, and has even increased due to COVID-19 as organizations are placing a higher focus on their individual contribution to pandemic risk management and mitigation. Therefore, the demand from investors and the C-Suite for establishing a program to address ESG factors has also gained significant interest in recent months. 

While there is a broad spectrum of ESG program needs based on industry, regional, or company requirements, some of the more common areas identified as emerging needs include market based emission factors, carbon credit tracking & allocation, a centralized emissions dashboard, and creating an overall sustainability culture.  

 How Successful Is Your ESG Program? 

There is an inherent value of incorporating digital solutions for ongoing ESG & sustainability program management.  Having a centralized and standardized platform not only increases productivity and efficiency by saving time and resources spent on data input and reporting; a digital solution also enhances user engagement by providing an intuitive interface to access information.  

Below are 4 advantages of incorporating a digital solution into your ESG framework:  

  • Establishing a Baseline: Establishing a footprint and streamlining data collection to track and trend site-level resource consumption and sustainability reporting initiatives. 
  • Project ExecutionIdentify, prioritize, and execute energy & resource conservation opportunities and projects. 
  • Measuring Success: Gather insights to analyze and quantify program performance through comprehensive reporting capabilities.  
  • Determining ROICalculating actual cost savings of your ESG and sustainability efforts and sharing best practices and success stories across the enterprise. 

 

Interested in more information on the benefits of incorporating an integrated, comprehensive reporting framework for your sustainability and ESG programs? Be sure to check out this episode of the Voice of GensuitePreparing Sustainability Reports to Impress Stakeholders & Investors 

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