Article 1 of 6
Unless you have a clear view of the entire reporting landscape, the onslaught of additional ESG reporting requirements can be overwhelming.
How do all the components work together? Have you got your internal systems and processes nailed down early enough to manage the onslaught? First, let’s understand the landscape.
What’s changed?
Sustainability used to be a separate reporting stream focused on environmental issues. Then the focus widened: to employees, to gender splits, females in leadership and governance, pay gaps, health and safety, training and development, parental recognition and then wellbeing. Contributing to society and communities came next. GRI became the global/default way to measure these things. So far, so good.
Then the complexities began to come thick and fast:
-
ESG: the financial risk side and regulatory side of the sustainability coin. How to frame? Through the social responsibility lens, or the risk consideration and mitigation lens? Is it still the preserve of the Sustainability Team, or is the onus now on the Finance and Investor Relations team?
-
Mainstreaming: Sustainability is now part of the main business story, no longer an adjunct. More companies see sustainability as a competitive advantage (in financial markets terms, employee attraction and retention terms, and public sentiment terms). It’s no longer only a necessary market expectation, but a value creation strategy with dedicated staff driving sustainability initiatives and benefits.
-
Climate change: Disclosure, risks, TCFD reporting mandates etc. Where does this fit? Is it now mainstream reporting or a compliance tick box? Hygiene factor or competitive advantage?
-
Modern Slavery: is it a mandated sideshow or a relevant issue in your company’s supply chain?
-
TCFD: is about to be replaced by IFRS S2. With TNFD a new issue on the horizon.
Currently, all the above are at various stages of being globally and locally mandated, creating real pressure on reporting in terms of:
-
gathering, monitoring and verifying data for use as content,
-
reporting even more compliance and transparency data accurately, and
-
expectations of external assurance growing rapidly.
Added together, the additional cost, expertise and resourcing requirements place ever greater burden on companies, their management teams’ responsibilities, not to mention the detailed increased oversight now required at governance level.
Consequences for your crew
This surge of reporting affects more than just the financial and comms teams. It cascades down throughout entire organisations.
The Finance Team is where the first wave of accountability and assurance will hit. Investor Relations will be feeling the pressure too. But the impact goes a lot further.
-
It will domino down to the Sustainability Team, where additional in-house resources will likely be required.
-
IT will be impacted, because specialist automation software will be needed to streamline data collection and verification.
-
Your Comms Team will be tasked with bringing it all together in your external reporting, and help bring your employees along on the journey.
-
Your HR Team will need to train and upskill employees to ensure everybody’s broad understanding of sustainability dynamics are aligned.
-
Procurement will need to ensure the integrity of your supply chain – particularly on the mandated inclusion of Scope 3 emissions on the climate front and modern slavery requirements.
-
Your C-Suite will be constantly confronted with this issue, and will need to embed this firmly into corporate strategy that manifests itself powerfully through day-to-day BAU.
So, the ramifications are massive. The co-ordination workload on your reporting team makes their job a lot more time-consuming and stressful. Internal systems, processes and discipline established early will ease the pressure as deadlines approach. In Article 5, we look at ways to set up such systems.
Begin with the end in mind
There are many ways to finally publish the required information - one hefty document, or separate reports. We’ll dive deep into that topic in Article 3. But working out formats early on will allow a lot of questions to fall into place and avoid reworks and circular conversations.
Start with a clear roadmap of content, and what frameworks you choose to comply with:
ESG/Sustainability Reporting Planning Framework – compliance considerations
There are more and more components to bring together now, and we’re very aware of the pressures this adds on your organisation. This series of articles is designed to help you find a step-by-step way through the thickening jungle.
Key to many downstream questions is knowing your audiences, and we’ll go into the detail in Article 2: Understanding your Audience Groups.
