Dec 27, 2024 • 3 min read
Sustainability reporting is an essential part of an organization’s ESG strategy. When you’re developing an ESG report, there are hundreds of different things that you can include. This article breaks down five major considerations an organization should have when developing your ESG report.
While there’s no one standardized ESG reporting framework, there are hundreds of frameworks to choose from, so you don’t have to start from scratch. For example, the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) both contain reporting frameworks that investors and other stakeholders commonly recognize.
One of the largest criticisms against ESG reporting is the critique of “greenwashing,” organizations inflating their ESG efforts to appear as if they are making a change for the environment.
To counteract this in your ESG reports, it’s important to clearly highlight the major initiatives that your organization is targeting, what impact it’s making, and how that is relevant to your overall business and industry as a whole. Avoid sharing metrics that don’t contribute to any of your ESG goals–this can contribute to extra bloat and introduce more opportunities for greenwashing.
Setting sustainability goals for 10 to 20 years out is a good start, but it can make it hard to see major progress in the short term. Instead, break down those larger goals into shorter, more specific measurable targets. Use a goal-setting framework like SMART goals to help make your strategy more achievable.
Since there is no standardized way to create an ESG report, creating the right message can help enforce your organization’s goals, culture, and values. Depending on your organization’s mission, you might want to rely more heavily on environmental information than social, or vice versa. A good example of this is Nike’s ESG report—while their annual report does contain information regarding environmental impact, the majority of their content was focused on the many social initiatives the organization is taking on.
Compile all of your ESG data into one report, and craft a cohesive story throughout the report to tell the story of your organization. Use this as an opportunity to look at your current strategy and adjust accordingly for next year. Are there any major initiatives that weren’t successful? Are you barely on track to meet a goal? Assess your performance based on these metrics reported and adjust your strategy for next year as needed.
In this context, ESG stands for environmental, social, and governance. In regards to sustainability, the environmental portion of ESG strategies help to ensure that organizations are considering more sustainable business practices to help reduce their impact on the environment.
As of right now, ESG reporting is not federally mandated in the United States. Some states require ESG reporting if the business meets a certain threshold.
An ESG reporting framework is a formal way to display the information within an ESG report. There are many different ESG reporting frameworks, but the most common ones include the Global Reporting Initiative (GRI) and Sustainability Accounting Standards Board (SASB).
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