Last week, we spoke about some of the common challenges faced by financial providers when it comes to their ESG reports. And with ESG-related issues only becoming more integral to the world of business and investment, serving as a key component of the UK’s post-COVID recovery, it’s never been more important to get your reporting right.
Two-thirds of institutional investors believe ESG will become “industry standard” within five years. How will you make sure you’re ready to embrace all future legislation? And ensure your portfolios overdeliver on a wider range of ESG-related disclosures?
With this in mind, we’ve compiled a list of 7 dos and don’ts to help take your ESG reports from good to great. They’ll be a good jumping off point to get yourself in pole position to embrace all future ESG developments.
Do strive towards one, consistent process
With many regulatory requirements and conversion metrics to consider, it can feel like your ESG reports are spread over countless spreadsheets, surveys, and platforms. And managing these only adds to the time and resource burden of analysing and managing the impact of your investments.
A convoluted process doesn’t lend itself to quick and accurate visualisation of your portfolio’s progress. Both are critical to managing your portfolios in real-time and adapting to changing market conditions.
Disparate data sets are a messy, logistical nightmare. You don’t want to waste precious time that could be spent managing and growing your portfolios on time-consuming admin. Instead, you want one central repository for all your ESG data. Somewhere you can feed it in from various sources and monitor progress on an ongoing basis.
💡 Food for thought – The more straightforward and manageable your ESG reporting process, the more engaged the businesses you invest in will be with it. And the more varied and valuable data you can collect.
Do act sooner rather than later
While a lot of ESG disclosures aren’t yet mandatory, obligations are set to increase over time. Rather than waiting for this moment and playing catch up, it’s best to iron out your process, invest in technology, and find your feet before you have to start reporting on various new disclosures.
And the sooner you get to grips with a system that works for you, the sooner you can set expectations with the businesses you invest in. For example, keeping them accountable to monthly reporting.
Do embrace new technologies and tools
As the pressure on investors to prioritise ESG increases, and more legislation emerges over coming years, so will the amount of data collection and reporting you’re expected to complete. Manual, time-consuming processes may just about do right now. But they likely won’t for long.
For clear and consistent reporting that serves you long-term, you’ll need to take a more mature approach.
You wouldn’t use spreadsheets for financial data and reporting, so why would you for ESG?
There are tools out there designed to make your life easier. Technology exists for the sole purpose of streamlining and simplifying the ESG reporting process. Investing in these can free up significant time and focus to put on critical investment decisions.
Do consistently revisit your approach
The more experience you have with ESG reporting, the more mature your system and disclosures can be. You never want to just be doing the bare minimum. So always stay on the look out for how you can refine your approach.
Developing a strategy will also help you to stay on track and monitor your progress over the long-term, developing an ESG approach that aligns with your wider business growth and goals. Your ESG reporting will never be complete. There will always be room for improvement and growth.
💡 Food for thought – If you don’t already have one, now might be the time to develop an ESG strategy. This way, you can ensure you’re focusing on ESG issues most material to your organisation and industry. This will provide valuable focus to ensure your time and resources are being spent optimally.
Don’t greenwash
It’s not enough to say you’re doing all you can to be a more sustainable, ethical organisation. People want organisations that walk the walk, not just talk the talk.
Any claims you make should always be supported by reliable, current data. This means you need to consider the metrics you report on. The more mature and clearly defined your metrics, the more robust data you can collect to support your claims.
Don’t view ESG reporting as an annual project
Instead of viewing ESG as a one-and-done project, frame it as an ongoing journey towards more ethical and transparent portfolios.
Producing annual reports and then forgetting about ESG until next year won’t cut it. In fast-paced industries where everything can turn on its head overnight, taking a real-time, ongoing approach to ESG-related issues is key.
To make the strongest decisions and mitigate your risk as much as possible, you want to have access to fresh, reliable data and insights.
Don’t view your data in isolation
Your ESG reporting shouldn’t just be retrospective. You want to always be visualising where you want to go and reimagining future goals and targets to help you get there.
It’s also important to shine a light on the stories behind your data. The what, why, and how of individual initiatives, and real-world tangible outcomes, will be just as important as knowing you’ve met X target or KPI. Strong ESG reports will look past the numbers to also tell the bigger picture of your efforts.
Finally, full transparency requires you to read between the lines of your data. It’s highly unlikely you’ll have access to all the data you want and need to tell the complete story of your portfolio’s impact. But that doesn’t mean you just ignore it. Within your reports, you’re going to want to identify all that’s missing. As well as explain what challenges you’ve faced in your reporting process and suggest ways you’ll improve.
Strong ESG reporting isn’t just something that happens. It requires an ongoing commitment and investment to evolving your process and maturing your approach. But step one is wanting to do better. These 7 tips are a great way to take stock of where you’re currently at and start identifying avenues for future development.
Using Impact, organisations like yours can maximise their impact. Serving as a central hub for all matters of ESG, we make it simple to measure, evaluate, and report on your portfolio’s impacts. To find out more about what our platform could do for you, schedule a demo or get in touch with the team on 0161 532 4752.