For many companies, executing environmental, sustainable, and governance (ESG) initiatives isn't new — but telling the story of ESG results is. The challenge is not just that ESG reporting is novel, but that ESG reporting is a giant grey area. Regulations aren't yet mandatory. Standards aren't yet universal. Stakeholder priorities aren't entirely aligned.
ESG reporting is part art, part science, and while there's no such thing as a "good" or "bad" ESG report, there are ways to make ESG reports more impressive.
Five practical tips you can use to improve your ESG reports
#1: Use a framework, but customize where necessary
I like to think of ESG frameworks as less of a compliance burden and more of a helpful guide for communicating and structuring ESG performance.
That said, we are seeing more ESG frameworks become set in regulatory stone. Take the Corporate Sustainability Reporting Directive (CSRD), for example, which applies to all large, non-capital market-oriented companies in the EU — or companies already subjected to the Non-Financial Reporting Directive (NFRD). We wrote a whole article about CSRD here.
CSRD aside, many companies reside in countries that have not yet become subject to ESG regulations, but they are still looking to disclose their ESG performance. There are many recognized frameworks that these companies can consider using based on their ESG goals, including:
- Climate Disclosure Standards Board (CDSB)
- The Sustainability Accounting Standards Board (SASB)
- The Global Reporting Initiative (GRI)
- UN Principles for Responsible Investment (PRI)
- Carbon Disclosure Project (CDP)
While choosing a framework aligned with your sector, industry, or E, S, or G priorities is wise, I encourage you to report outside the box too. Have impressive metrics, performance, or projects on the horizon that can showcase ESG commitments but go beyond the limitations of your chosen framework. Add them to the ESG section in your next annual or quarterly report or publish them in a dedicated press release.
#2: Visualize performance
A picture isn't worth more than your ESG score, but it certainly makes an impact in communicating ESG performance. Detailed data tables interest regulators, standards bodies, and ESG scoring agencies, but they are often too granular or inaccessible for other stakeholders. Visualizing statistics can help the public, consumers, investors, and suppliers, digest and understand ESG data and make sense of your ESG impact.
#3: Connect ESG performance with financial results
Investors are increasingly interested in organizations operating sustainably, but that doesn't mean they're abandoning their interest in the bottom line. They want companies that are sustainable, moral, ethical — and profitable.
Making the connection between ESG performance and financial performance can incentivize investors, financing bodies, and other stakeholders who have (or want to have) interests in your organization. Concretely showing how ESG favorably contributes to the bottom line will only positively impact your organization.