In a world that is increasingly socially and environmentally aware, the importance of a business’ reputation can be as significant as the profits underpinning it.
The public disclosure landscape has developed at a rapid pace on a global scale, and the vast amount of information available has left many wading through what is often termed an alphabet soup. ESG, which refers to the Environmental, Social and Governance impacts within a business, is the current focus of many investors and companies. There is an array of disclosure information that comes with this, and which can often add to the confusion for any who are new to this space.
In a world that is increasingly socially and environmentally aware, and which is largely driven by our Information Age, the importance of a business’ reputation can be as important as the profits underpinning it. There has even been a term coined to highlight the importance of a business’ image: Social License to Operate (SLO).
The vast amounts of information available through online channels, tied to the rate at which an issue can become viral through various social media platforms (e.g. Twitter, Facebook, LinkedIn) means that there is huge importance in a business being the author of its own public image. It is vital that the public image of a business is true to its ethics, values, and essence, and this is where understanding and managing ESG aspects becomes important as well.
Those companies in industries that have a heavy impact on the environment and on local communities are unfortunately sometimes unable to avoid doing so. The larger the scale of the operation and the more intensive the processes, the more likely the company will be met with resistance from the public community, as well as viewed in a negative light by potential investors.
A company can circumvent this however, through the establishment of good governance, positive social investment and development, and the mitigation of environmental impacts. These positive practices can nullify negative repercussions and enhance the image of the company. Accurately reporting these positive impacts to the wider community can therefore be important.
In recent years, to streamline the ‘noise’ of corporate governance disclosures, financial disclosures, and non-financial disclosures, there has been a move towards standardization and reporting against various frameworks and standards. These are typically established internationally, and not only provide guidance to businesses on how to report, but may even guide companies on how to establish positive practices.
The creation and standardization of these frameworks provides guidance on undertaking disclosures in an orderly manner, reduces ‘noise’ and confusion, and assists stakeholders to understand the risks posed by a business to its environment and surrounding community.
IsoMetrix’s centralized management system provides unmatched visibility into every aspect of your ESG program, enabling you to collect data, report on any ESG standard (or framework) and proactively manage your business risk.
By tracking progress towards specific company ESG goals and objectives, reporting is simplified for managers, and their ability to optimize organizational processes and procedures is enhanced at every stage of the ESG management process.
Frequently asked questions (FAQ)
Yes, ESG factors can impact all industries, although the significance and focus areas may differ. Tailoring disclosure to industry-specific impacts is important.
Technology helps streamline data collection, analysis, and reporting, enabling companies to manage, analyze, and present their ESG information more effectively for reporting purposes.
Companies can gather feedback from stakeholders, learn from industry peers, track performance metrics, employ experienced ESG consultants, and adapt their ESG disclosure strategies accordingly.
Companies should establish robust data collection and validation processes, adhere to chosen reporting frameworks, and consider third-party verification.
ESG reports cover data on energy and water consumption, CO2 emissions, personnel diversity, labor practices, governance structure, community engagement, and more.