The pace of societal change and renewed focus on climate change has contributed to the demand for transparency on sustainable practices and governance for large companies and multinational organizations.
To meet stakeholders' growing expectations, companies are increasingly disclosing non-financial key performance indicators (KPIs), covering a wide range of sustainability areas, including carbon footprint and decarbonization targets. Environmental, Social, and Governance (ESG) reporting is an effective communication tool that enables companies to be more transparent about the risks and opportunities they face as a result of the environmental pressures of the 21st century. In this blog article, we will examine three ways ESG reporting can add value to your business.
1. Promote Investor Confidence
There is a growing importance on ESG reports as investors and other stakeholders call on companies to disclose their strategies to secure a better future for both people and the planet. ESG transparency is a key focus for companies moving into 2022 and beyond as it promotes investor confidence. Investors are increasingly considering ESG issues to help manage their investment risks and generate sustainable long-term financial returns. As of August 2021, 95% of companies in the S&P 500 had made detailed ESG information publicly available, with the remaining 5% publishing high-level information on their website.
ESG reporting speaks to your sustainability story by showcasing long-term commitments to addressing integrated corporate responsibility. Companies that do not invest in their ESG strategy show a lack of transparency, potentially turning away concerned investors. Businesses with strong ESG performance have demonstrated time and time again higher returns on investments, lower risks, and more resiliency during a crisis.
2. Climate Risks
Climate change is impacting all businesses across the world. According to the IPCC's latest Assessment Report, the weather is expected to become more extreme, with heatwaves, floods, droughts, and wildfires occurring more frequently throughout this century. The question posed to companies of all sizes is whether your business can withstand the impacts of climate change?
Robust ESG reporting can help identify climate risks and sustainable investment opportunities for your business. Climate risk frameworks help assess the impact of climate change on your business and integrate environmental risks and opportunities into governance, management, strategy, and investment decisions. As a result, companies can be better equipped to understand the role of climate change on their corporate functions, and consider the impacts on long-term strategic planning, decision-making, and disclosures.
3. Business Growth
A resilient ESG strategy can also create value by attracting B2B and B2C customers with more sustainable product offerings/services. Companies can achieve better access to resources through stronger community and government relations. In addition, it has been shown that companies that invest in long-term ESG strategies enhance their bottom-line with lower energy consumption and enhanced sustainable development across business operations. Studies have also shown a link between companies with strong ESG propositions and productivity uplift. Businesses are able to attract and retain talent through greater social credibility, boost employee morale, and minimize a broad range of interconnected environmental liabilities.
NUS Consulting Group's global sustainability division helps large companies to go beyond traditional financial reporting to deliver a more comprehensive view of corporate environmental performance. NUS specialists are experts in assisting companies in understanding their carbon footprint and advising on bespoke decarbonization pathways to achieve a net-zero standard. For more information on how we can help you navigate through the world of ESG reporting and showcase your carbon reduction commitments, contact us for an initial consultation with one of our sustainability experts.
More: Research Notes, Decarbonization, Environmental, Social, and Governance (ESG), ESG Policy, ESG Reporting, Net-Zero