The 7-Step ESG Reporting Process

The Science and Art of Developing Your ESG Report or Sustainability Report

Whether it’s your inaugural ESG report or one of many you’ve already produced, it is important to respect the process. Depending upon the goals of your company or organization, that process may range from the somewhat complicated to the extremely complex.

No matter where you fall on that ESG adoption spectrum, the process begins with an evaluation and ends with a report that shares the concerted efforts of the people supporting your organization and its commitment to ESG.

What is ESG?

Environmental, Social, and Governance, is a voluntary process by which a company conveys commitments to making a difference — from sustainability measures that positively impact the environment to ethical standards and guidelines on how a company treats its employees, shareholders, and the communities in which it operates. Typically, non-financial in nature, the ESG report conveys a series of both qualitative disclosures of topics as well as quantitative metrics.

Why should a company care about developing and sharing the non-financial measures communicated within an ESG report?

Because in today’s business world, ESG matters to all your stakeholders — including investors. Doing so demonstrates company management’s commitment to transparency about the risks and opportunities your company faces. In fact, a recent analysis on sustainability reporting by The Conference Board recognized that “transparency can help strengthen relationships with employees, customers, suppliers, and local communities.” 

Not to mention that more and more companies are including sustainability data within their annual reports because it appears to have a positive impact on the bottom line. According to a 2021 report from the NYU Stern Center for Sustainable Business, “the exponential growth is due in large part to increasing evidence that business strategy focused on material ESG issues is synonymous with high-quality management teams and improved returns.”

This appears to hold true for both public and private companies. For publicly traded companies, it would appear that if you’re currently not reporting on ESG matters, you’re behind the curve. In 2020, G&A Institute reported 9 out of 10 companies in the S&P 500 were publishing a sustainability report. 

For privately held companies, while the information is a bit more difficult to discern, evidence suggests that public companies are leaning on private companies – typically suppliers to their organization – to get their ship in order. “Sustainability reporting is becoming widespread across both public and private sectors…. However, standardizing key elements of sustainability reporting across the public and private sectors is undoubtedly difficult.” (The International Institute for Sustainable Development (IISD))

The bottom line: developing an ESG report or sustainability report is good business.


The 7-Step ESG Report Process:

To begin the process, it’s important to focus on the science of the ESG report or sustainability report. The Science behind any report includes a few key components that must be addressed before the Art of the ESG report takes over.

The Science of ESG reports is rooted in defining the criteria to measure, and then gathering the data behind your company’s competitive advantage — an advantage born of the efforts to make a difference.


STEP 1:

Benchmark

First, it’s critical to determine what a successful ESG report will look like for your company. This includes identifying how that success will be measured, when it will be shared, and how it will be communicated. Outlining the key constituents who will receive the information in the ESG report is an important part of this step. It is also helpful to identify several key competitors and conduct a review of their ESG efforts and ESG topics, particularly if this report is your inaugural sustainability report or ESG report.


STEP 2:

Select a Disclosure Framework or Frameworks

Next, select a reporting framework or set of frameworks that makes sense for your organization as well as disclosures associated with them. According to a recent report by the Government & Accountability Institute, some of the most commonly used frameworks and disclosure standards include:

1. Global Reporting Initiative (GRI); 50 percent of S&P 500 companies use this framework

2. Carbon Disclosure Project (CDP); 65 percent of companies respond to CDP

3. Sustainability Accounting Standards Board (SASB); 14 percent of S&P 500 companies presented alignment

4. Task Force on Climate-Related Financial Disclosures (TCFD); five percent of S&P 500 reporters presented alignment

5. United Nations Sustainable Development Goals (SDG); 36 percent of S&P 500 reporters presented alignment

Other reporting frameworks include the Climate Disclosure Standards Board (CDSB), and the International Integrated Reporting Council (IIRC).

GRI currently remains the most widely accepted framework (KPMG, The Time Has Come, Survey of Sustainability Reporting 2020). Yet, in 2020, a number of our clients at Obata reported on their ESG disclosure across multiple frameworks.

Over the coming years, there may well be a different single accepted framework or combination of frameworks that emerge as the predominant framework of choice, but for now, it is important to research and evaluate each one to best represent your company and its ESG efforts.

Once a framework is selected, identify the key performance indicators (KPIs) that will be used to determine the success of your ESG efforts.


STEP 3:

Gather Your Data

This step involves implementing the disclosures chosen from the selected framework and collecting and organizing the data associated with them. Often, companies will work with a consulting firm to achieve this, depending upon the level of complexity and number of disclosures involved (ex: the GRI framework offers numerous standards and disclosures). In many cases, the level of complexity is dependent upon a company’s goals or industry regulations.

Once the Science is established, the Art of the ESG report shares the data, weaving a story of how it all impacts your stakeholders — your employees, shareholders, prospective and current customers, suppliers, governments, industry regulators, media, and communities. It is often ideal to utilize an outside professional firm for these next steps to ensure clarity and minimize bias in how the information is presented to the intended audiences.


STEP 4:

Messaging

This step involves interviewing internal audiences (ex: employees, management, suppliers) as well as those involved in collecting and organizing the data that will be shared in the report. From these interviews, an outline will be constructed, content written, edited and reviewed.


STEP 5:

ESG Report Design

Visually conveying the content in an impactful and engaging manner is critical to the overall success of your ESG report. It is helpful to develop at least two design approaches and work with a respected and experienced ESG report design firm to ensure that your report is professional, not overly complex, and easy to read.


STEP 6:

Production

Once the design and content are finalized, it is time to lay out the report in a user-friendly manner. This is where data is visualized as charts or infographics, and key messages and stories bring the report to life. Once the final product is approved, printed copies may be produced, electronic PDF documents are created, and if desired, a microsite or website content page is created.

For PDF reports, its recommended that your report be interactive. While these reports are rarely printed, they are typically designed in either landscape or portrait formats to be printed on conventional copiers. An interactive PDF report is essential to post to your website since these reports deliver engagement with interactive components similar to a website.

For online formats, it is highly recommended that a landing page, separate microsite or integrating the report into a company’s website be developed. This will help harness the power of your website’s search engine optimization (SEO) efforts. Either of these formats will lead to more readers finding your ESG report and could lead to additional traffic to your website.


STEP 7:

Sharing

Once produced, letting the world know about your ESG report and sustainability report is the final step. It is often useful to employ an outside communications firm, or marketing or advertising agency, to help spread the word.

Digital marketing considerations include email campaigns, social media, SEO and PPC (pay per click) initiatives. It is also important to leverage more traditional means such as press releases and media pitches to complement your digital efforts and provide a fully integrated marketing communications program.

Finally, once you’ve created and shared your ESG report or sustainability report, it is helpful to begin planning for subsequent reports. Many companies add to their ESG reports every year as their ESG or sustainability reporting needs or requirements increase over time.

Working with a ESG reporting partner who can help guide you through the ESG reporting process can help improve the outcome and ultimate success of your report. A good ESG report partner will offer the following services:

  • Benchmarking
  • Messaging, copywriting and editing
  • Design development
  • Typesetting and proofreading
  • Data visualization and infographics

As outlined here, the process of developing a successful ESG or sustainability report hinges on the science and art of solid, professional experience. It is critical to understand the detailed process behind the ESG report and just as critical to work with the right partners to make it a reality.


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