ESG reporting is no longer a nice-to-have for companies. By the end of 2022, all UK private limited companies, LLCs and privately quoted companies with more than 500 employees, and a turnover greater than £500 million, will be required to publish an ESG report. Similar regulations are coming into force, or being discussed across the globe. So where do you start when approaching your first ESG report – and how can you maximise its reach?
Understand the value of an ESG report
If you’re below the threshold for mandatory ESG reporting, you might not see the value in creating one. After all, the cost, and effort you’ll need to put into gathering and compiling information, may feel too high for one document. But thinking about your ESG report as a standalone piece of content is reductive and a missed opportunity.
In the right hands, a high-quality ESG report can lead to a mountain of excellent content marketing. Pull out any surprising, illuminating or attention grabbing statistics and use them as the basis for a blog, social media post or even whitepaper. Pop a highlight reel of information into a press release and share your research far and wide. While the general public might not appreciate the finer details of compliance within your report, there’s likely to be much more interest in learning about your gender pay-gap initiatives, your carbon offsetting projects and your engagement with communities.
One thing is vitally important, though. To extract maximum value out of your report, and ensure your communications are genuinely impactful in the right way, you’ll need to put in place a content strategy. But that’s a topic for another blog …
Learn by example
Those operating in sectors under the most intense ESG scrutiny may already be well versed in what great reporting looks like, even if you haven’t produced your own just yet. However, if you are a small business operating outside carbon-intensive industries, you might not know where to start. The best thing to do? Start looking at great ESG reports across a broad range of sectors.
Every business is different, meaning no two reports are the same, but there are lots of ways you can borrow from the best reports. PepsiCo’s lauded 2020 sustainability report presented the data in a clear, customisable way that banished any notion of putting a spin on the figures. The report, which was embedded in PepsiCo’s website, allowed readers to download a custom selection of figures for analysis and comparison, showing a genuine commitment to transparency.
If you feel a bit daunted comparing yourself to a titan of industry, check out IEA Infrastructure’s 2020 report instead. This construction business, which has helped to build renewable energy wind farms, is well-written and laid out in a clear, concise manner. It acknowledges that future reports must be more metrics-focused, but its candour and clear plan to remedy its data gaps earn IEA bonus points.
Get to know the frameworks
You might have heard people talking about the ‘big five’ – but what are they, and why are they so important in ESG reporting? You might need to engage an ESG consultant to decide which ones are most appropriate for your organisation, so it’s sensible to have a basic understanding of what they do.
Let’s start with their names: CDP (Carbon Disclosure Project), CDSB (Climate Disclosure Standards Board), GRI (Global Reporting Initiative), IIRC (International Integrated Reporting Council) and SASB (Sustainability Accounting Standards Board).
To ensure that sustainability reporting is consistent, these five framework and standard-setting organisations came together in September 2020 to publish a joint statement. This pivotal document outlined their shared vision of the “elements necessary for more comprehensive corporate reporting” and explained that they will work in collaboration to reach this goal.
Each organisation has a slightly different focus, meaning their frameworks and standards are designed to complement each other and be used together. The IIRC, for example, aims to connect sustainability disclosure to financial reporting. The CDP, meanwhile, focuses more on emissions and environmental actions.
Broadly, ESG frameworks make it easier for both companies and readers to understand reporting and compare apples with apples. From a company’s perspective, frameworks and standards give them a specific and detailed picture of the information and metrics they need to cover. And for the reader, who could be an analyst or an investor, it is easier to accurately gauge a company’s ESG actions against a clearly-defined set of criteria.
Don’t forget the S and G
It’s understandable that ESG comms often focus heavily on the environmental aspect of the topic, given the urgency of the climate crisis. However, an excellent, well-rounded ESG report should demonstrate that you are giving time, attention and funding to tackling or preventing social and governance issues within your organisation and the community more broadly.
If you operate in markets where child labour or human rights violations are common, for example, it’s vital to touch on these topics. Silence on vital social issues can be mistaken for complicity, so taking a strong stance against these issues will allay investors’ fears.
Even though it is not as emotive and might not lend itself to compelling prose as well as the other factors, corporate governance is crucial in ensuring investor confidence and buy-in. NatWest shared a survey of 299 investors, conducted by Russell Investments, which found that 91% said governance had the biggest impact out of the three factors on their investment decisions. Demonstrating your compliance with laws, regulations and reporting requirements will give people the confidence that your business is one worth putting their money into.
Speak to the key players
To make sure your report paints an accurate, well-rounded picture of your organisation, you need to make sure key stakeholders are consulted along the way. It’s a difficult balance to strike; asking for too many opinions can lead to a too-many-cooks situation, while getting too few can leave your report feeling reductive and unfinished.
Getting the right help when planning your materiality assessment (a formal process to determine how key stakeholders feel about ESG issues) can help you get it right. You could opt to send out a survey to a wide pool of stakeholders to gather basic opinions on certain topics and conduct interviews with C-suite executives and key members of the board. Whatever you opt for, make sure your focus is on finding the information needed to make the report both compliant and interesting for your readers.
Craft a narrative
Your ESG report should be so much more than a box-ticking exercise. It’s a chance to shine a spotlight on your company’s ESG-related achievements that might not receive the attention they deserve in your annual report. And by presenting the non-negotiable facts within a genuinely enjoyable narrative structure, it’s far more likely stakeholders, shareholders and even customers will stay interested long enough to appreciate your efforts.
Once you’ve gathered the supporting information, the narrative of your report may start to emerge on its own. You may have had a transformative year for sustainability, with record improvements made in areas like carbon emissions. The women of your organisation may have been the ones propelling action and forcing the wage gap shut, making their story the most compelling one to tell. Or, you may, frankly, just be grateful to be operating after a challenging year. Working with a skilled writer can help you find the right narrative path for you, whatever the circumstances.
Build an ESG comms strategy
Although this topic deserves more than a section to fully explain its importance, the one thing that’s essential is understanding your ESG report’s role in your wide ESG communications. As we touched on at the beginning, there are lots of ways to squeeze value out of your report.
It can be difficult to get your ESG communications right first time, as it requires a unique set of skills that most busy professionals don’t have time to hone. Outsourcing your ESG report, content strategy and content production can free up your schedule and ensure these complex, technical pieces are handled with a necessary expert touch. Get in touch to see how our expert ESG writers can help.