5 Key Benefits for Corporates Practicing Good ESG Reporting

Good ESG reporting can give companies a competitive edge in their industries. Find out how your company can benefit from a well-written ESG report.

Good ESG reporting is indeed a competitive advantage if done right. Sharing how well your company engages in good environmental, social and governance practices not only improves transparency on the various risks, opportunities and challenges your company faces, but also assures stakeholders of your company’s operations and values.

Here are five key benefits of publishing a well-written ESG report:

  1. Strengthen brand perception
    As brand perception heavily depends on a company’s relationship with its stakeholders, effective and open dialogue is key. Many companies are disclosing their ESG commitments, backing their claims with measurable data on their actions, to align their brand with good ESG practices. ESG reporting allows companies to publicly share their business activities in relation to ESG, which can positively affect how people view them. With measurable data to track your ESG performance, ESG reporting can set you apart from competitors, boost your company’s image as a responsible and meaningful brand, and appeal to stakeholder interests in the long run.
  2. Attract consumers
    With the growing trend of green consumerism, publishing an ESG report can attract more consumers. A recent survey highlights that 70% of consumers care about the impact brands are having on environmental and social issues, and 46% pay attention to these efforts before purchasing and supporting a brand’s products. In particular, young consumers are more dedicated to sustainability, with 83% of millennials and 78% of Gen Z-ers looking for businesses that are socially and ecologically conscious (below).



    Source: PwC (2021)
  3. Enhance employee engagement
    ESG concerns are important to the current talent pool, both personally and professionally. In order to attract and retain employees, companies must be aware of ESG issues and be proactive in developing programs and practices that appeal to their employees. Focusing on sustainability and ethical business practices creates a sense of purpose and meaning for their employees, which boosts motivation and nurtures a stronger sense of loyalty. Satisfied and enthusiastic employees are also more productive and yield better results. Communicating practices and values through publishing an ESG report can help to attract potential employees and maintain a robust talent pipeline.
  4. Attract investors
    Over the years, ESG investing has become more mainstream. Despite major disruptions, such as the Covid-19 pandemic, investments flowing into companies with good ESG performance continue to grow.
    In 2020, Larry Fink, CEO of BlackRock, the world’s largest asset management firm, wrote in his CEO letter, “Our investment conviction is that sustainability- and climate-integrated portfolios can provide better risk-adjusted returns to investors. And with the impact of sustainability on investment returns increasing, we believe that sustainable investing is the strongest foundation for client portfolios going forward.”  Investors believe that companies that take sustainability and climate concerns into consideration generate a better risk and return profile.
    Having a clear ESG strategy and demonstrating consistency in reporting are important factors in investors’ decision-making process. Companies that do not issue ESG reports risk missing out, as hesitant investors could pass them up, and may even lose existing investors.
  5. Stay ahead of the curve in a fast-changing regulatory landscape
    Governments around the world are tightening their regulations and implementing laws to penalize companies that do not comply with ESG regulations. Many stock exchanges – including in the EU, Singapore, Indonesia, India and Hong Kong – are mandating sustainability reporting for listed companies in loan, investment and insurance activities.
    Governments also require transparency in supply chain operations. The EU’s Circular Economy Action Plan requires company disclosures on supply chain activities. According to Harvard Business Review, multinational corporations are increasingly pledging to partner only with suppliers that meet social and environmental standards. More MNCs are placing greater emphasis on having a sustainable supply chain of suppliers and distributors and are conducting audits to ensure their entire value chain.

In sum, reporting on your company’s ESG performance positions you strategically to reap the benefits of a range of competitive advantages.

Want to know more about how you can practice good ESG Reporting?

Read our previous post on ‘5 Best Practices for ESG Reporting’.

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5 Best Practices for ESG Reporting

ESG reporting is an essential sustainability practice for organizations. Understand the basics of reporting and the best practices you can use.

Environmental Social Governance (ESG) is a huge buzzword that continues to gain momentum. The term refers to three different aspects of corporate sustainability, Environment, Social and Governance, which have been used to categorize indicators that measure a company’s sustainability.

What is ESG Reporting?

ESG reporting is a business practice that allows companies to measure and communicate their commitment to and progress towards their ESG-related goals and initiatives, boosting transparency. Typically publicized across companies’ websites and social media, ESG reports can be used both internally within the company and externally for stakeholders – from employees and investors to local communities – to understand where a company stands with regard to its ESG performance.

“More than 90 percent of S&P 500 companies now publish ESG reports in some form, as do approximately 70 percent of Russell 1000 companies.” – McKinsey

A well-written ESG report should be a reflection of your company’s sustainability initiatives, performance and impact on stakeholders. Be sure to highlight the risks and opportunities that play a significant role in impacting your company’s long-term business performance, as well as your approaches to risk management, and account for diverse perspectives. Remember, your report should convey the company’s ability to create value over time!

Here are 5 best practices we recommend:

  1. Identify the most relevant metrics you should disclose.
    Not all metrics are relevant to every organization and industry. You will first need to determine what sustainability factors are material to you. According to the Global Reporting Initiative (GRI), materiality refers to the relevance or importance of topics that best reflect an organization’s economic, environmental and social impacts, or influence the decisions of stakeholders. Knowing which topics are material to your organization will ensure that you always prioritize reporting on factors that matter the most to your stakeholders.
  2. Choose the right sustainability standard or framework
    There are many science-backed, credible international standards and frameworks to comply and align your reporting with, such as GRI and the Sustainability Accounting Standards Board (SASB). These frameworks not only help you avoid biases in reporting by providing a fixed set of topics and metrics that need to be disclosed but also help you stay ahead of increasingly stringent regulatory trends. Explain your choice of disclosures with reference to your selected standard(s) and use an appendix to map out your disclosure with the relevant topic in your chosen standard or framework.
  3. Collect and communicate your data accurately
    Compiling all the data needed to produce a report can seem like a daunting task. Fortunately, there are many automation services out there to help you transform your ESG data into a report format and make future data collection and analysis easier. First communicate with the right departments within your organization to ensure that all the information is accurately collected and appropriately formatted.
  4. Verify your data to boost your credibility
    Third-party verification and validation of reported information is an important step in reducing your company’s risks of greenwashing. Featuring a description of your company’s internal and external review processes enhances transparency with stakeholders on the reliability of your reported data. This can come in the form of an assurance statement in your report to let your stakeholders know that all the information provided has been checked before publishing.
  5. Review your practices and progress every year
    ESG Reporting is not just a one-off affair. Continuously reviewing your policies and practices and staying updated on your industry’s materiality factors annually will help build your track record on sustainability. Stay up-to-date with sustainability and ESG trends on an industry, national, regional and global level to improve your ESG-related strategies and initiatives for the future.

Read our previous blog post to learn more about the differences between sustainability, ESG and CSR reporting.

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✅ Gauge your company’s sustainability performance

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