ESG Reporting: How and Why (An Introduction)
Friday, 25th March 2022
ESG reporting is the way that businesses monitor and disclose data on their environmental, social, and governance (ESG) performance. These days, it’s far from a niche concern. Studies show that 90% of the biggest US businesses are now reporting on sustainability metrics and, in 2020, 85% of investors considered ESG factors when making investments.
That means that if you’re not already using an ESG framework, you’re at risk of falling behind. ESG reporting can show your asset holders, customers, employees, and stakeholders that you’re committed to doing good, you’re aware of your business risks, and you’re a smart long-term investment.
So, how do you get started with ESG reporting? At Infogrid, our Healthy Building System can make monitoring and improving ESG metrics much easier for organisations, their landlords, and facilities managers.
Here’s what you need to know.
What is ESG reporting exactly?
ESG reporting refers to the process of disclosing data on your company’s environmental, social, and governance impacts. Reporting is the way that you will share that information with the investors, regulators, or customers that would like to see it.
Simply, an ESG report means you can be more transparent about the business opportunities and risks that you face. It’s also a way for investors to steer clear of companies that aren’t performing well enough.
To break it down, ESG reporting should feature information on the following:
Environmental performance. This means your company’s contributions to carbon emissions, your energy efficiency, your impact on climate change and biodiversity, and your air and water quality.
At Infogrid, we can help you monitor and improve your environmental performance. Thanks to our IoT sensors, we helped one client save 800 tonnes of CO2 emissions every year.
Social impacts. The “S” of ESG relates to your social impact. That means your people and culture: your commitment to customer satisfaction, employee wellbeing, data protection, human rights, and labour standards, as well as those in your supply chain.
Covid-19 has brought employee wellbeing to the forefront of business priorities and, according to a recent analysis, to the forefront of ESG concerns. Moving forward, indoor air quality monitoring will be crucial.
Corporate governance. Your ESG report should also consider a company’s internal processes—to ensure they stick to industry best practices and ensure transparency. Factors could include leadership, executive bonuses, shareholder rights, and lobbying.
There’s more than one way to report your ESG disclosures. As interest in ESG performance has grown, the number of ESG frameworks has risen too.
Here are the key ones to know.
Key ESG frameworks to be aware of
When reporting ESG, you don’t have to follow a single methodology. Depending on which ESG framework you follow, the way you report your ESG score can differ dramatically. Here are some of the frameworks you should know:
Global Reporting Initiative (GRI). It was the very first methodology for reporting ESG, and now as many as 75% of all companies that do ESG reporting currently work with GRI.
The aspects of your operations you’ll need to report are split into eight areas: materials, energy, water, biodiversity, emissions and waste, products and services, compliance, and transport.
Sustainability Disclosure Requirements (SDR). The biggest companies registered in the UK will be required to disclose some key ESG metrics, possibly as soon as April 2022.
It is expected that SDR, like the EU’s new Corporate Sustainability Reporting Directive, will be based on the idea of ‘double materiality’. This means that companies will have to report on their activities’ impacts on the environment, as well as impacts of the environment on their own activities.
International Integrated Reporting Framework (IIRF). While the IIRF hopes to be the comprehensive reporting framework internationally, it has a lot of competition.
To meet the needs of this reporting framework, you will need to provide details of your governance structure and how this supports its ability to create value, any risks and opportunities, as well as your business model, strategy, and resource allocation.
Carbon Disclosure Project (CDP). As its name suggests, the CDP focuses on emissions and other forms of sustainable practice.
Reporting is simply carried out through the framework’s climate change, water security, and forests questionnaire.
Sustainability Accounting Standards Board (SASB). The SASB tailors the metrics it uses to different industries. There are 77 in total, which you can find here.
This is far from an exhaustive list. There are dozens, if not hundreds, more ESG reporting methods out there. But the core concern of ESG is to show that you’re aware of your environmental and social impact.
Here’s why that matters:
Why ESG reporting is so important
Navigating the different ESG reporting procedures does not come free of challenges. But it is definitely worth your time. Why? Studies have revealed compelling reasons why every company should do make the effort:
ESG information shows you’re a good investment. Investors are increasingly making decisions based on corporate ESG data. That means that if you’re seeking funding, it’s really in your interest to demonstrably improve your ESG performance.
Consumers prefer brands that commit to sustainability. The public regularly chooses sustainable companies over others and they are willing to spend more with greener companies too. ESG can help you prove your credentials.
Mandatory ESG is being considered. While not every company has to report its ESG performance just yet, mandatory reporting may not be far away.
You’ll give your employees what they want. Employees want to work in a company committed to sustainability—according to Infogrid’s research. By giving them what they demand, you’ll make your company a more attractive place to work.
You’ll make your business more efficient, smarter, and more sustainable. Ultimately, you’ll improve your business performance, while reducing your externalities.
How to get started with ESG reporting
Reporting on your social and environmental impact makes sense for your business as well as for the planet. Here’s how to get started.
Choose your ESG framework. You may need a different reporting methodology depending on your industry, priorities, and location. Knowing your obligations will be crucial.
Set targets. Using metrics from your chosen framework, determine the key priorities for the targets you want to meet. These will guide your ESG strategy over time.
Start measuring. Now, data collection—on greenhouse gas emissions, energy efficiency, building health, and water use—will be the central part of your ESG reporting.
Once, this would be done manually, but times have changed. At Infogrid, we can help landlords and facilities managers collect the data you need on the efficiency of your buildings. With our Healthy Building System, you can receive live data on energy use and more from across your portfolio, no matter which ESG framework you are using.
And we can help with the next stage too:
Ensure transparency in your reporting. One of the biggest challenges for businesses is to ensure that their ESG data is valid and error-free. At Infogrid, we can help you ensure that you are reporting complete, accurate, and correctly formatted data.
Show how your ESG aligns with your business strategy. Often, investors want to see how ESG results fit with your wider corporate goals. You’ll need to make the case for this when presenting your ESG report.
Continually improve your ESG performance. If there are things that aren’t up to scratch in your organisation, that’s okay. But you need to solve those environmental issues for your next annual report.
ESG reporting does not just happen once. Instead, it requires continual monitoring over time. That’s why Infogrid’s Healthy Building System is such a valuable tool for any company that wants to improve their ESG score.
Make ESG reporting easy with Infogrid
Infogrid’s solutions combine real-time IoT sensors with AI analysis technology, to translate environmental data into meaningful building operation insights.
That means you can easily monitor and improve the environmental footprint of your workplaces and building portfolios, while also making your workspace a happier and healthier space for employees.
