Every company today is required, either by law or stakeholders, to operate sustainably. Customers are no longer convinced to just click the order button because an item has attractive ads or looks nice. Instead, they dig back to understand the brand more effectively, especially the production process. When it comes to regulatory authorities and international standards firms, the focus is ensuring sustainability becomes part of every brand. Indeed, the trend has started working and is gaining traction year after year.
By the close of 2020, over 90% of companies listed on the S&P 500 index were reporting their sustainability efforts. Now, HKEX has followed in the footsteps of NSE and LSE by requiring all listed firms to provide reports on their sustainability. Coming further down, there are specific regulations, such as labor laws, Taxonomy regulations, workplace safety, and emission standards that directly or indirectly push companies to adopt sustainability. Therefore, you have no way out, and it is prudent to adopt sustainability reporting right away. But how do you go about it? Here is a simplified guide for ESG sustainability reporting.
Understand the Principles of Sustainability Reporting
To get the process of sustainability reporting right, it is important to start by understanding it. ESG sustainability reporting is a process of disclosing and communicating a company’s efforts on sustainability in three areas; environmental, social, and governance. By capturing the details of the impacts from your company, stakeholders, such as investors, can decide whether to buy its stocks. Let’s take the example of a company listed in HKEX and the reporting requirements.
By asking companies to report their efforts on sustainability in addressing anticipated challenges, investors are able to gauge the chances of their investments generating high returns. More importantly, they are sure of directing their resources to a brand that is committed to addressing challenges such as global warming. Therefore, they know that their efforts are helping to make the globe a better place for both the current and future generations.
To get it right on sustainability reporting, you also need to understand the underlying principles. The principles help you to know the core requirements and ultimately avoid greenwashing. The most notable principles of ESG sustainability reporting are accuracy, materiality, and verifiability. The report should also be easy to read for the targeted brands.
The Simplified Process Sustainability Reporting
The process of sustainability reporting is aimed at ultimately generating reports for stakeholders to assess and compare the efforts of a company about sustainability. Therefore, it must be correct and clearly presented so that investors, funding organizations, customers, and other stakeholders can make the right decisions about your firm.
● Review your company operations to understand the key risks and opportunities. Is your company making losses because of inefficient operations? Are you losing market share for associating with supply chains that use unethical processes?
● Carry a comprehensive materiality assessment. This is aimed at identifying the right reporting topics for your company. At this point, you need to engage stakeholders and ensure to focus on what is interesting to them.
● Develop clear objectives for sustainability and then draw a plan for achieving them. For example, if you want to cut on emissions, it might be a good idea to consider changing the type of energy used in the production line. To reduce your impact on water sources, you might want to fund projects that promote water catchment restoration.
● Gather the right data and create your report. Note that the process of gathering data for sustainability reporting should start from the company review and run through the entire reporting phase. Also, you need to run the right analysis and provide a report with information that is easy for the stakeholders to read and understand.
This post has demonstrated that sustainability reporting does not have to be complex if you follow the right process. The good thing is that you can make it even simpler by working with good sustainability reporting software. You might also want to work with a sustainability reporting consultant. Visit Diginex.com to learn more about sustainability, sustainability reporting, and sustainability reporting software.