This article was written by Jess LeDonne, Director, Policy and Legislative Affairs & Chad V. Scott, Consulting Manager.
An environmental, social, and governance (ESG) report is a document where a business can share company policies, performances, and impacts in those areas. These reports are relatively new and still being standardized across various industries, and thus will vary greatly between organizations.
Often, they are divided into the main sections of:
- E - Environmental: Focused on climate change, greenhouse gas emissions, pollution mitigation, energy efficiency, water management, and other environmental impacts of the business.
- S - Social: Focused on employee's wellbeing, working conditions, human rights, labor standards, and diversity, equity, and inclusion (DE&I) efforts of the business.
- G - Governance: Focused on corporate governance, including internal controls, cybersecurity, privacy practices, management, and Board structure, pay equity, and compliance of the business.
The report will include data, statistics, corporate policy and handbook language, and the like to firmly demonstrate the company's commitment to the main ESG tenants. As far as structure goes, the Global Reporting Initiative (GRI) and SDG Impact Standards are not mandatory standards, but they are examples of the attempt at standardization that have be used internationally to “reflect global best practice for sustainability reporting, helping organizations respond to emerging information demands from stakeholders and regulators.” The GRI framework encourages companies to report on current issues that are relevant to the company in both a prospective and retrospective way.
In order to create the most impactful, accurate, and useful ESG report, we suggest that you follow these four straight-forward steps:
- Step 1: Identify the key ESG drivers for your industry, business, and organization. Be sure you consider the company's most pressing current issues, gaps, successes, concerns, and opportunities in the ESG space.
- Step 2: Collect as much data, information, and statistics you can, with consideration for future plans.
- Step 3: Get guidance from a company that knows ESG, like The Bonadio Group!
- Step 4: Ensure your ESG report aligns with your business strategy, with a consideration for GRI and SDG standards, and consider your preferred frequency of ESG report refresh/republication.
Ultimately, your ESG report should provide information across the full spectrum of ESG factors, and directly link each one to the operation of your business. As stated above, partnering with a trusted advisor that is knowledgeable in ESG standards, frameworks, reporting, and compliance is the best way for your organization to ensure you are prepared for the time that these reports may become mandatory.
If you need further guidance or have any questions on this topic, we are here to help. Please do not hesitate to reach out to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.