4 ESG reporting best practices

ESG Best Practices

Today, we will explore some best practices in ESG. Want a refresher on ESG? Check out our TIL (Today I Learned) article on ESG. 

With ESG reporting becoming more regulated and picking up more attention among stakeholders, it is important to know what the “best” reporting practices are. Since the field of ESG is blooming, there is a wide array of best practices. Which one is “best” for you really depends on your region, industry, and regulatory contexts. In this article, we hope to inspire you to look more into what works for you.

ESG reporting standards and frameworks

Don’t confuse “frameworks” and “standards.” Based on principles, “frameworks” guide what topics are needed in the reporting and how information is structured and prepared. “Standards,” on the other hand, ensure that frameworks are implemented with acceptable quality. Standards provide specific requirements (including metrics) for the content of each topic in the reporting. For example, the Sustainable Accounting Standards Board (SASB) is a standard that can be used to implement the framework recommended by the Task Force for Climate-related Financial Disclosures (TCFD). Frameworks and standards should be used together for ESG reporting. 

There are multiple organizations working on standards and frameworks separately. It is hard to name the “best” standard or framework because each has a different reporting focus (e.g., more climate-focused vs. more gender-focused). Since each standard and framework has its specialties, it is the most comprehensive to use multiple standards and frameworks. In addition, the rise of Sustainable Development Goals (SDGs) also calls for more comprehensive reporting. In light of this need, five leading reporting organizations–CDP, Climate Disclosure Standards Board (CDSB), Global Reporting Initiative (GRI), International Integrated Reporting Council (IIRC) and SASB–have worked together to announce an “integrated reporting” strategy.

In Hong Kong, Hong Kong Exchanges and Clearing Limited (HKEX) provides an ESG reporting guide and a step-by-step preparation guide for listed companies. Some companies also choose to follow additional standards and frameworks to enhance the comprehensiveness of ESG reports. For listed companies and beyond, Carbon Solutions provides the CarbonCare® ESG Label to recognize performers who follow ESG reporting best practices.

Tips to excel in ESG reporting

After introducing the standards and frameworks, here are more tips to excel in ESG reporting. 

  1. Develop an ESG strategy that aligns with the company’s strategy (mission and vision); this ensures instrumental efforts in executing the ESG strategy and prevents greenwashing.  
  2. Report against one or more recognized ESG standards and frameworks; this will make your ESG report more comprehensive and credible. Also, pay attention to any local or industry-specific regulations. 
  3. Consider the United Nations (UN) SDGs as a framework to identify priorities and organize the ESG report; this shows the company’s commitment to advance in global sustainability commitments. Information on SDGs would also be important for impact investors. 
  4. Identify suitable metrics and key performance indicators (KPIs) for ESG reporting. As a reference, HKEX provides reference KPIs for “social” in this document. The European Federation of Financial Analysts Societies also gives examples of KPIs for each ESG domain. Companies should choose metrics and KPIs that work for their strategy, industry, and local context.  

We hope this article gave you a broad overview of the best practices in ESG reporting. We only outlined the very basics in this article as ESG is a very expansive topic. Please stay tuned for more on ESG in the future as we explore this topic more in-depth. In the meantime, we look forward to seeing you at our events to discuss ESG together. 

At The DO we empower businesses to create a positive impact. We work with companies and organizations on their purposeful transformation using our award-winning DO Method that rapidly turns ideas into action around topics that are crucial for your organization’s future, and we want to work with YOU. Click below to book a coffee with us:

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