ESG metrics serve as a baseline for ESG reporting consistency and provide guidance for companies starting their ESG journey. ESG metrics aligned to frameworks and standards generally inform these scores, but raters and rankers also may include media trends, controversy analysis, and other public information. Most ESG rating agencies and rankers determine companies' ESG scores through proprietary evaluation processes that provide limited transparency. What metrics are used to determine ESG scores? Investors are often looking for details on company values, employee relations, and corruption concerns as well as employee and executive compensation. Social ESG data can include statistics on company diversity, human rights, animal rights, and even information related to labor practices in the company's supply chain.ĮSG disclosures around governance provide transparency into company leadership and operations. On the environmental side, it can range from greenhouse gas emissions to water and raw material usage or even waste management. The types of ESG data that a business can disclose can be vast.
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Working across departments to compile, analyze, and report financial and non-financial data for ESG disclosures isn't always easy - this is where ESG frameworks and ESG reporting software and platforms come into play.ĮSG data includes environmental, social, and governance data from a business and its value chain, which includes customers and suppliers. Many companies haven't been collecting ESG data or do not have structures or a team in place to put a complete ESG report together. This has led many companies to disclose only what they're required to, or to use ESG frameworks that make the most sense for their stakeholders.ĮSG rating agencies and rankers use different criteria and methods to determine ESG scores.
Global and industry ESG reporting standards are rapidly changing - and the regulations, frameworks, and standards don't all align on the information they request from a company, whether it's about the supply chain, ESG goals, or performance. Then map the journey to achieving your goals for ESG reporting and ESG performance overall. Use information gathered from stakeholders to refine the metrics and values that matter to your organization. Determine ESG materiality and build your ESG reporting roadmap Based on this research, engage your ESG stakeholders to brainstorm which metrics are important to your organization, identify what ESG data you're already collecting, and determine the data you still need.ģ. Build a diverse, cross-functional team with expertise in different areas, like finance, human resources, internal audit, investor relations, and risk.ĭownload ESG reports to compare and determine what data peers are disclosing and which ESG frameworks they're using. Once you have determined the internal and external stakeholders whom you serve, it's time to tap into your company network and build a team of self-motivated individuals who are eager to support your ESG program.
Identify ESG stakeholders, and build your team
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Unsure how to develop your ESG strategy? Here's where to begin:ġ. Some example topics related to governance include: Increased transparency into corporate governance is quickly becoming an expectation.
Governance in ESG covers how companies are directed and controlled-and how leaders are held accountable. The data disclosed in the social responsibility portion of ESG covers a wide range of topics from how companies are fostering people and culture to diversity statistics and community impact. Some examples of environmental issues are: The "E" in ESG means the environmental responsibility companies have, including energy use and how they manage their environmental impacts as stewards of the planet. The types of data included can vary from greenhouse gas emissions to labor practices, workforce diversity, executive compensation, and more.Ĭonfused yet? Don't worry, we're going to break all of this down for you. It also includes partners, community impact, and companies in their supply chain. What ESG information is most relevant for any company to report is based on their operations, management, and stakeholders' expectations.ĮSG data includes more than just each company's individual impact. Many companies publish ESG reports in alignment with ESG reporting frameworks, standards, regulations, or investor expectations to demonstrate transparency and disclose the environmental, social, and governance factors that contribute to the overall risks and opportunities involved with a company's operations.ĮSG reporting requirements can vary by jurisdiction and industry, and they are still evolving.
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