How to Create an ESG Report

Corporate ESG reporting is now at the forefront of creating a sustainability strategy, building a sustainable reputation within your industry, and keeping stakeholder loyalty. To keep up with competitors, sustainable businesses will need to know how to create an ESG report that is effective for benchmarking and tracking progress on ESG data over time. 

What is an ESG report?

ESG reporting refers to the disclosure of data covering a company's operations regarding environmental, social, and governance. These reports are used to communicate the company's sustainability and ethical impact to stakeholders, including investors, customers, employees, and regulators. ESG reports may be filed voluntarily or they may be mandatory depending on the size of the company and nations it does business with. The data for topics included might be related to different topics for different industries such as greenhouse gas emissions, energy, water, and waste management, biodiversity, human rights for employees and surrounding communities, ethical business practices, board composition, and transparency and accountability.

ESG reporting is based on materiality which is what aspects are of importance to the finances of the company and what aspects should be excluded from the report. ESG materiality involves the ESG factors that affect the long-term sustainability and success of a company.  Double materiality according to accounting and sustainability reporting means that the reporting company takes into account financial materiality and ESG materiality (the non-financial aspects), in its reporting and decision-making processes.

What are the benefits of filing an ESG report?

• ESG reports help investors assess risks and opportunities related to sustainability and ethical practices, potentially influencing investment decisions and giving you greater access to capital.
• Governments and regulatory bodies are requiring companies to provide ESG disclosures.
• Transparent ESG reporting betters a company’s reputation and builds trust with stakeholders.
• Identifying and addressing ESG-related risks helps companies avoid or mitigate potential issues that could impact their operations and profitability.
• Reporting to well-known ESG frameworks annually ensures consistency, comparability among peers, and reliability.

Government compliance and ESG reporting

Governments across the world have passed legislation that will force certain industries and companies of various sizes to report on their ESG data. With Europe’s ambitious climate goals to get to net zero emissions by 2050, a major highlight of ESG reporting is carbon emissions. Right now, Europe has been leading the way regarding ESG and GHG emissions directives with the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) recently being adopted by the EU, which both highlight the topic of climate change among other ESG metrics. And these are just two of many regulations. More countries are proposing directives to achieve net zero by approximately 2050 due to commitments they have made in line with the Paris Agreement. This means that ESG reporting is no longer optional and those who report voluntarily before they are under mandate, will take the lead.

What to consider before filing your ESG report

• Doing a materiality assessment should not be overlooked. This is where stakeholders tell you what is important to them and this is the first step before starting the report. It’s a valuable tool that will benefit your company’s competitive edge.
• Choosing the right ESG reporting framework will ensure transparency and comparability in your region and industry, providing an accurate benchmark for target-setting and tracking progress internally and comparing with other companies externally over the years. Discloser ​​leverages the power of AI to generate precise, government-compliant ESG reports and allows flexible exporting of your reports to align with any format, ensuring universal compatibility. 

How to create an ESG report step-by-step

1. Do a materiality assessment

You can identify material issues by evaluating what is important to your stakeholders by conducting a survey and then creating a materiality matrix. The SASB Materiality Finder will also help you find out what ESG metrics are important to you in your industry as well.

2. Start collecting data

Based on the materiality issues you find necessary to report, start collecting utility bills, transportation metrics, financial statements, etc., and compile them into an ESG software platform. This can be done using automation with software integrations and AI to report accurately. Some data will be qualitative while other data will be quantitative. 

3. Plan an ESG strategy

This can be done in concurrence with data collection. As you begin to see how company trends manifest, you can unwrap the problems from there. Pinpointing where you need to improve will guide you in your strategy. Using your materiality assessment to see what’s important to stakeholders and comparing that to data measurements will make it clear that certain issues need to be addressed. Risks and opportunities can now be managed and progress can be monitored over time. 

4. Plan how to govern ESG in your company

Figuring out who is allotted different tasks and who is responsible for managing the completion of those is key to an effective ESG strategy. Having a structured organizational strategy with a clear hierarchy in your team will empower you to communicate clearly and to carry out the important tasks that need to be done on time. This also encourages higher accountability and ensures that accurate, on-time work is going to flow as smoothly as it possibly can to avoid any hiccups down the road, especially in complex supply chains. Consistent governance leads to accurate and government-compliant reporting.

5. Choose an ESG reporting framework

Depending on the size of your company, the industry, and the region, the decision may be made for you based on local regulations. 

You can also choose from common and trusted frameworks in your industry. For example, if you’re in real estate, the Global Real Estate Sustainability Benchmark (GRESB) is a common ESG reporting framework that property investors are expected to go for. The choice would be obvious as GRESB is a trusted ESG reporting framework in the industry so investors can use the data to compare with others in your field. 

Additionally, there are industry-agnostic frameworks across the world like the Global Reporting Initiative (GRI) that is the most widely used standard. 

6. File your ESG report with Discloser

Discloser supports a wide range of global and regional reporting formats, including GRI, SASB, CDP, CSRD, and more. This flexibility empowers your business to produce reports that are tailored to the needs of various stakeholders and even build custom frameworks. Company managers can also invite multiple team members to collaborate. What is more, Discloser’s built-in approval process ensures all reports meet stringent company standards before they are finalized.

In conclusion

When ESG reporting is a normal expectation in your business strategy, you're protecting your business in the long run. Preparing your organization early on before the regulations come into play will go a long way with stakeholders and put you at the forefront of sustainability in your industry. 

Try Discloser for free and check out the benefits of using AI to help manage your ESG reporting efforts.