Photo source: International Data Corporation
Companies of all sizes and stages of development are feeling new pressures to increase transparency about how they address environmental, social and governance (ESG) issues. This is driving more companies to take on writing ESG/Corporate Responsibility (CR) reports for the first time. I’ve had the opportunity to guide a number of early CR reports with clients, and while it’s certainly a labor of love, each reporting cycle lends itself to lessons and opportunities for growth.
Why now? While the term ESG (Environmental, Social, and Governance) has been long familiar to corporate social responsibility and sustainability professionals, the COVID-19 pandemic, climate crisis, and racial justice movement, among other converging issues has led the acronym to gain importance among investors, corporate boards, C-suite leadership and other internal and external stakeholders. As a result, these stakeholders have adopted an amplified focus on ESG-related issues, including the need for transparency and disclosure around companies’ employee practices, governance, sustainability, social impact initiatives, DEI, and other material issues.
This increase in stakeholder awareness and scrutiny of company action means transparent reporting has become an expectation of companies, and the likes of Patagonia and Starbucks have set high bars for others. But what does it take to get there?
Although every company and report has its own unique challenges, I’ve distilled six tips that help make the early reporting process a little lighter of a lift and have guided my own report creation process each year:
1. Focus on progress, not perfection. Investors are not expecting perfection out of the gate. Instead, they’re looking for engagement, action, and progress across your business as it relates to your ESG and CSR practices. Don’t be afraid to have a dialogue with your investors on their ESG expectations —this feedback will be valuable to inform the strategy, theme, and framework of your reporting.
2. Identify your “gold standard” report(s). Find a company, or multiple, whose report you love; they can be from your industry, be of a similar size, or embody a similar ethos. Make note of what you like from their reports, as well as what doesn’t feel like a fit. This includes everything from the layout to the visuals to the language used. Leverage these insights to your advantage, even if they’re only used for inspiration.
3. Leverage the materiality process. As obvious as it may sound, think of materiality as the map for your reporting journey. While it can be time-consuming, this industry-agnostic tool provides insight into the corporate responsibility topics that are most important – material – to your stakeholders, shows where your company stands comparatively to your peers, and ultimately informs the areas your company should focus on from both a reporting and strategy perspective. It also gives you valuable insight into how your peers are showing up, how they’re positioning themselves in the marketplace and how you compare as it relates to your material issues.
4. Lean on subject matter experts across the business. While you can’t possibly know about every detail of each initiative going on within the business, your CR Report will certainly benefit from including as much materially relevant information as possible. This is where conducting briefing sessions with key subject matter experts across your company becomes vital to getting a sense of all activities being executed as they relate to your employees, community, customers, environment, and governance practices. Think of these individuals as an extension of your team, helping you to pull different pieces of the puzzle together.
5. Leverage data to support your storytelling. Data and storytelling should always work hand-in-hand. When woven in the right way, this combination will provide credibility, trust, and reinforces your company’s purpose. Using data to strategically reinforce storytelling provides an opportunity to appeal to and engage a diverse set of stakeholders around your companies’ ESG efforts. The key is to not only focus on the metrics themselves, but on the significance of why you’re doing what you’re doing to create a compelling narrative.
6. Remember, one size does not fit all. Some companies may not be ready to report against formal frameworks such as SASB or GRI. Don’t feel pressured to do what everyone else is doing; remember, you should do what is right-sized for your company and its current state. Start taking inventory of metrics from formal frameworks that you may already measure and which are applicable to your business. Use these to assess your readiness for alignment with the likes of SASB or GRI, as well as to determine where you have gaps. If you’re not ready to pick a framework, think about which data points you can include in the narrative of your report in the interim to further support your storytelling. As you continue to progress in your CR and ESG journey, so will your level of disclosure.
As you take on your first report, always keep in mind that it, and all subsequent ESG reports, only provide a snapshot of a moment in time. They help celebrate successes, set targets, and acknowledge challenges ahead. But perhaps most importantly, the reporting process educates, aligns, and activates internal teams to actively engage in the ongoing, multi-year ESG strategy development and refinement. I hope that by applying these tips, you deliver a powerful first report, and continue to iterate on your reporting process with more allies at your side as you take on future reporting.