How to Improve ESG Reporting

Finding someone who doesn’t agree with the basic idea of sustainability can be difficult. Most of us recognize the benefits of making sure that we leave the world a better place for the generations yet to come. Asset managers and institutional investors have shown staunch support for reporting ESG (Environmental, Social, and Governance) matters.

In the spirit of improvement that’s continuous, here are a few suggestions that the CFOs out there might want to consider regarding their oversight, input, and involvement. 

KPI

Let’s take a look at KPIs (key performance indicators) for a specific industry just to see what they might be. Key performance indicators for the shipping industry might include things like on-time pickups, zone distribution, weight distribution, on-time delivery, average cost per pound and shipment, and more. KPIs can include ESG data in order to measure their impact on the performance of the business. 

SDGs

You can use the SDGs (sustainable development goals) set forth by the UN to locate sustainability issues within the company and then show the contribution of your business to a global initiative. In 2015, the UN unanimously adopted the 2030 Agenda for Sustainable Development.

This contained 17 comprehensive and universal goals to be used by members of the UN when it comes to framing their priorities and agendas through 2030. Businesses should take these goals into account when they choose sustainability priorities that have to do with their operations, and in reports, they should map out the areas they choose to the framework of the UN. 

Supply Chain

The supply chain can be defined as a complete system of first producing and then delivering a service or product. This is from the first stage of sourcing any raw materials all the way to the final delivery to your end users. Your supply chain and ESG are linked. This is due to manufacturers not being able to understand their position in regard to ESG if they don’t include the impact their suppliers have or if they don’t take a hard look at their supply chain. 

ESG Framework

Business owners should strive to report against a minimum of one ESG framework, if not more. Popular frameworks include one called the CDP, the DJSI (Dow Jones sustainability indices), the GRJ (Global Reporting Initiative), and the SASB (Sustainability Accounting Standards Board). Your investors need these metrics so they can compare and contrast performances in the company. 

TCFD

The recommendations by the TCFD (Task Force on Climate-Related Financial Disclosures) should be addressed. This report has established suggestions for disclosing consistent and comparable information regarding climate change opportunities and risks. As businesses take these recommendations into consideration as they adopt their business strategies, decisions regarding investments, and reporting that’s consistent with transitioning to a carbon economy that’s lower, they show responsibility as well as foresight regarding climate issues. 

When it comes to ESG reporting, the good news is that there are a lot of fantastic reports out there. Because of that, this article wasn’t meant to suggest that reporting for ESGs, typically, isn’t already a discipline that’s well-developed, a very well-done product, and appreciated by those who use these public reports, as shown by multiple examples, and across multiple industries, including the shipping industry. 

The whole point, when it comes to ESG reporting, is to show all governance, social, and environmental topics of interest to all of your stakeholders in a way that they’ll be able to use when they’re making decisions. The suggestions you’ve read in the previous paragraphs should assist your management team and CFO with accomplishing that goal.