Why is ESG data reporting important?

03 February 2023 


Environmental, Social, Governance (ESG) reporting is rapidly growing in importance, leaving organisations without an ESG strategy at risk of being left behind. 

Consumers, regulators, investors and stakeholders have become more environmentally and socially conscious and that has undoubtedly impacted what they expect from the organisations they interact with. So, tracking and communicating how your business performs across all three pillars of ESG is essential for building stakeholder confidence, now and in the future.  

With stakeholders placing an increased emphasis on ESG, the risks associated with not implementing a robust ESG reporting strategy will only increase too. 

Although reporting on your ESG performance can seem like a daunting task, the benefits far outweigh the potential risks of not acting:

Beat the competition to investment 

A study last year by Gallup found that 48% of investors are developing structured sustainable investing funds, which are designed to measure performance and risk of companies that are expected to align to an ESG strategy to lower investment risk and enhance brand value. 

ESG ratings are fast becoming the preferred way for investors to look at suitable business opportunities, with high ESG ratings being seen as safer and more sustainable investments. So, monitoring and reporting on ESG which is enhanced by qualified and auditable data can help you stay ahead of the competition, making your business more attractive to investors and helping them (and you) minimise risk. 

Reduce waste and save money

An effective ESG strategy isn’t just for show. It will allow you to monitor, report and, ultimately, act on your findings. It can help you identify areas of your business that are not profitable or areas that are wasting energy and resources, which can lead to positive changes like going paperless, reducing reliance on expensive fossil fuels or monitoring and updating inefficient energy applications (all of which can have a huge impact on your bottom-line finances). Our expert advisory team can help you identify the areas you need to be reporting on and the best ESG frameworks to be working within to maximise impact.

Appeal to more consumers

A wider societal shift in recent years has seen more and more consumers care about the environmental and social impact of the organisations they engage with. ESG-conscious organisations that are scoring highly in their environmental reporting are becoming increasingly attractive to ethically motivated consumers. 

With a recent report by PWC finding that 48% of consumers want companies to show more progress on social issues and 54% on governance issues, aligning with your customers’ beliefs and values has never been more important. What’s more, you’ll be making changes that benefit the environment and local communities, helping the planet by doing the right thing.

Avoid costly damage to your reputation

Failing to deliver on your ESG promises or engaging in practices that aren’t socially and environmentally conscious (such as negatively impacting the environment through poor waste management or having bad employment practices through a lack of proper diversity and inclusion) can be damaging to your brand reputation and, therefore, your profitability and longevity. Increasingly, consumers and stakeholders are holding companies accountable for being environmentally, socially and fiscally responsible; 64% of consumers said they choose, switch, avoid or boycott brands based on their stance on societal issues.

Ensure you’re complying

When it comes to ESG reporting, rules and regulations across all three pillars of ESG are changing rapidly and need to be monitored more closely than ever before. As it stands, the majority of ESG reporting is voluntary, however, carbon emissions, waste management, working conditions and community programmes will fall under different rules and regulations depending on the sector, location and size of an organisation. 

It’s clear they are only going to become more complex and, therefore, important to track. With businesses increasingly expected to report on all areas of ESG, a robust ESG reporting platform will make disclosing information to the relevant regulatory bodies far easier, ensuring a greatly reduced risk of any fines or legal interventions for non-compliance. 

Attract and retain talent

ESG ratings are growing in importance when it comes to employee well-being. Gen Z and younger Millennials increasingly want more from the organisations they are working for, with many wanting to work for organisations that align with their values; nearly 40% of Millennials say they have accepted a job due to a company’s environmental and social management stance. With 39% of people saying they are happiest at work when they’re looking forward to their working environment and with happy employees being 20% more productive than unhappy ones, the benefits of a healthier and happier workplace are clear. Knowing exactly how you’re performing in this area can help you create a more positive experience for employees – from creating better health and safety policies to monitoring inclusion, diversity and working conditions. 

Why you should act now

According to Deloitte’s Global Risk Management Survey, 47% of organisations believe that ESG reporting is an extreme or very high priority for their organisation. However, knowing where to start can often be a barrier. 

ESG terminology can be confusing and knowing how best to monitor data (and what to track and when to track it) are just some of the barriers you might be facing. What’s more, a lack of resources or skills to get started and continue monitoring, reporting and acting on your data can make the entire task feel overwhelming. However, it needn’t be – with our expert advisory team and industry-leading technology platform, Sustainion, we can support you and make your journey into ESG a seamless one, whether you’re just getting started or looking to make improvements to what you’re already doing.

Contact our team to find out more and book your free demo >>>

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