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Forming Consensus on ESG Reporting

Extensive literature is available demonstrating why organizations should strive for transparency by reporting environment, social and governance (ESG) data to stakeholders, but sustainability professionals may still be grappling with the tactical moves required to secure senior leadership commitment to ESG reporting. Developing a comprehensive corporate responsibility reporting process and elevating disclosure and transparency may prove beneficial to your organization.

First, it is beneficial for an organization to formalize the company’s corporate responsibility to address several ESG elements relevant to your operations. This should include a high-level goal to create a corporate responsibility report that has value to the company and to its stakeholders. Such a report can become the catalyst for numerous constructive discussions with management to both improve the reporting process and, more importantly, to shape and move your corporate responsibility and sustainability activities forward.

In order to set your organization on the path to standardized reporting, executive management needs to understand transparency trends and the key considerations for creating a meaningful report. Choosing the right ESG indicators is an essential step in framing the conversation with management and ultimately creating a meaningful corporate responsibility report. Understanding the audience for the report highlights the relevance of various ESG indicators to your business. For example, extended supply chain and material use indicators might be more relevant to organizations with stronger manufacturing bases than service-oriented organizations.

These conversations with management should frame each potential ESG indicator in context of the purpose and value to the overall report as perceived by various senior leaders. Additionally, management should consider the ability to accurately report each indicator on an annual basis.

The availability of relevant data is essential to building a repeatable and systematic process for measuring performance.  Existing in-house data collection mechanisms may be available to leverage for reporting on certain indicators. For example, human resource systems may track employee demographics and provide metrics on key employee initiatives such as volunteerism. Or, facilities may already track energy monitoring and management that organizations can use to capture and standardize measurement processes for key environmental indicator data. Looking at legacy data collection systems may allow you to identify ways to be more efficient and allow managers to capitalize on the availability of more visible and reliable data. Moreover, subject matter experts in human resources, communications, real estate, employee health and safety, legal, and procurement can learn about the reporting requirements and become better aligned around the goals of corporate responsibility reporting.

Adopting a globally recognized standard third-party reporting framework is encouraged and reinforced by positive response to increased disclosure from stakeholders. Organizations should focus on increasing the quality of reporting to capture a more comprehensive view of ESG information. Ensuring a good feedback loop from stakeholders to management can help reinforce the importance of continuous improvement.

Introducing ESG reporting to your organization may present some challenges at first, but should eventually be recognized as a contributor to business success.  Over time, as internal stakeholders collaborate on tailoring ESG reporting to business needs and market trends, the many benefits of adopting a globally recognized reporting format should become evident: streamlined processes, increased visibility to manageable data, and positive external stakeholder response. Moving this process forward may hinge on familiarizing management with reporting goals, anticipating concerns about disclosure risk, and beginning formal reporting conservatively.

Although the challenges faced to formalize a reporting process may differ among organizations, the keys to success remain true for most: alignment with company values, corporate commitment, and understanding unique concerns that drive business decisions.

 

As sustainability program lead, Nick LiVigne manages SAIC’s corporate environmental sustainability program, ecoaction@saic. LiVigne facilitates the company’s senior-level Sustainability Working Group that frames the strategic direction of the program and strives to improve SAIC’s environmental performance and contributes greatly to the company’s Corporate Responsibility function. Learn more at www.saic.com.

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