Five years ago, Morgan Stanley conducted a study that determined 86% of millennials wished to invest in sustainable companies with strong social and environmental goals. In the 1960s, ESG reporting began to sway investors from showering money on tobacco companies or those with a vested interest in the war effort in Vietnam. The more modern environmental, social, and governance (ESG) reporting guide began in earnest in 2004. Does your company need to begin ESG reporting? Pollock Orora has information to persuade you to begin the process of creating a better business model more investors will find appealing.
What is ESG reporting?
Often simply called a sustainability report, the ESG report offers more than simple environmental measures. As a measure of transparency, the ESG report communicates the sincerity of a company’s efforts in social justice and governance of its actions and the actions of its subsidiaries. Knowing how a company plans to positively impact the environment and society gives investors solid measures to determine if those goals are being met. This transparency allows a point-by-point comparison with similar companies and can enhance your position as a worthwhile investment.
Is ESG reporting only for public companies?
No, both private and public companies of any size may partake in ESG reporting. Disclosing pertinent information to others with the backing of a third-party reporting body allows shareholders and investors to determine if the company is meeting its goals.
Do all companies participate?
ESG reporting is not mandatory, but it gives a window into the inner operations of businesses. Also, ESG reporting is not meant to take the place of existing business frameworks. It is a disclosure tool meant to help compare your company with others and to help set, meet, and hopefully exceed important goals.
Why would anyone want to participate?
The seal of ESG reporting stimulates financiers to invest in a company positively impacting others and the planet. When these data are presented to the public, it results in a positive response by those who wish to belong to a company that cares. Comparing 2 companies – one choosing to participate in ESG reporting and one not reporting – also stimulates the second company to step up and join the movement, which further pushes the positivity forward.
Is ESG reporting just greenwashing?
No. Because a third party is responsible for verifying all claims in an ESG report, it is far more than a “feel good” endorsement. The numbers and statistics within the report validate all claims both quantitatively and qualitatively.
What to expect in an ESG report
Referencing its initials, the ESG report contains 3 broad categories: environmental, social, and governance. Broken down, each category contains several subcategories to be analyzed.
Environmental
• Methods used to allay climate change, including carbon emissions
• Preservation of biodiversity by improving air, water, and wastewater quality
• Responsible use of all resources
Social
• Creating a nurturing workplace where labor standards and human rights are a priority
• Ensuring inclusivity regardless of gender, race, religion, et cetera
• Engaging all levels of co-workers in decision-making
• Ensuring the privacy of individuals and their data
• Reaching out to the surrounding community
Governance
• Internal controls
• Policies concerning leadership, compensation, auditing, and shareholder rights
• Impeding bribery and corruption through whistleblower programs
While ESG scores are not uniform from one third-party provider to another, they do prove measures have been accomplished within organizations year after year and give detailed information to compare one business to another. Future endeavors such as the EU taxonomy hope to equalize terms and definitions to prevent greenwashing.
Want to learn more about how your company can succeed in today’s economy while protecting the environment and your co-workers with programs such as ESG reporting? Call Pollock Orora at 800-843-7302 and visit our website.