ESG reporting refers to the disclosure of data covering the company’s activity progress in three areas: environmental, social, and corporate governance. It provides a snapshot of the business’s impact in these three areas for investors. The analysis of progress across these ESG factors summarizes quantitative and qualitative disclosures and helps screen investments. ESG reporting helps investors avoid companies that might act a greater financial risk due to their environmental influence or other social or governmental performance[1]. In other words, The ESG report can define as a report publishing by an organization about its environmental, social, and governance (ESG) impacts because of its activities and performance. It enables the corporation to be more transparent about the risks and opportunities it may face. It is a communication tool that plays an influential role in convincing skeptical observers that the organization’s actions are serious. ESG reporting includes both qualitative disclosures of materials as well as quantitative metrics used to measure an organization’s performance upon ESG risks, opportunities, and relevant strategies. It is a perfect and powerful tool of empowering organizations to answer in a single report different questions that stakeholders may raise[2].

ESG helps to achieve the quality of the relationship between internal and external shareholders in a company, which may dictate the company’s ability to manage risks and opportunities. as well, effective stakeholder management also supports crisis response and business continuity planning. in other words, ESG makes good business sense between stakeholder welfare and corporate profitability. As a result, there are many companies that combine their ESG reporting in their annual reporting to show how sustainability is embedded in their business, which has affected a massive surge in ESG reporting in the past few years. In addition to increasing global regulations regarding corporate ESG data reporting and still it is voluntary in most countries all over the world. Companies that have an influential ESG performance have demonstrated higher earnings on their investments, lower risks, and better resiliency when in a crisis. companies understand the significance of delivering ESG principles in their business strategy and plan, they are voluntarily presenting their ESG data in their annual reporting.

ESG reporting process includes the following steps:

• Build an internal team to create a reporting structure that includes ESG issues, targets, and initiatives, performance metrics, internal and external reporting standards.
• Carry materiality evaluation and measure the relative importance of sustainability concerns for all stakeholders.
• Working with the experts to provide real-time data to determine the company ESG needs and provide the resources and insights to satisfy reporting needs that comply with stakeholders, industry, and non-profit standards.
• Create a powerful communication strategy to showcase the company ESG management structure and reporting for external and internal stakeholders.
• Report the company ESG performance and explain how it aligns with the company business strategy.
• Continuously work on and enhance the company ESG performance by joining with stakeholders and understanding rising sustainability issues affecting the company business.

ESG reporting and disclosures help corporations get access to capital markets and secure their license to operate. Effective ESG performance leads to achieving the quality of the relationship between internal and external shareholders in a company, which may dictate the company’s ability to manage risks and opportunities. as well, effective stakeholder management also supports crisis response and business continuity planning. in other words, ESG makes good business sense between stakeholder welfare and corporate profitability. As a result, there are many companies that combine their ESG reporting in their annual reporting to show how sustainability is embedded in their business, which has affected a massive surge in ESG reporting in the past few years. In addition to increasing global regulations regarding corporate ESG data reporting and still it is voluntary in most countries all over the world. Companies that have an influential ESG performance have demonstrated higher earnings on their investments, lower risks, and better resiliency when in a crisis. Furthermore, preparing an ESG report may be challenging, as it must meet the specifications of the reporting standards. As well, organizations need to identify how to communicate related information and what ESG topics and indicators to report[3].

The terms “ESG” and “sustainability” are used reciprocally, especially when it comes to benchmarking and revealing data. Sustainability is a parasol for many green concepts and corporate responsibility, while ESG has represented the favored term for investors and the capital markets. In some cases, the industry has started with sustainability efforts, but it has developed to involve ESG practices, performance, reporting, and significance to capital opportunities. ESG data helps distinguish risk-adjusted returns. Emphasis on all three aspects has supported the shift in how companies measure and disclose their performance.

Reference.

1. Sphera, What Is ESG Reporting, and Why Is It Important? https://sphera.com/glossary/what-is-esg-reporting-and-why-is-it-important/
2. ESG reporting, Boards can lead the way on ESG. We share the why, what, and how of effectively overseeing ESG, https://www.pwc.com/sk/en/environmental-social-and-corporate-governance-esg/esg-reporting.html

[1] Sphera, What Is ESG Reporting, and Why Is It Important? https://sphera.com/glossary/what-is-esg-reporting-and-why-is-it-important/

[2] ESG reporting, Boards can lead the way on ESG. We share the why, what, and how of effectively overseeing ESG, https://www.pwc.com/sk/en/environmental-social-and-corporate-governance-esg/esg-reporting.html

[3] ESG reporting, Boards can lead the way on ESG. We share the why, what, and how of effectively overseeing ESG, https://www.pwc.com/sk/en/environmental-social-and-corporate-governance-esg/esg-reporting.html