What ESG Metrics Matter Most?
Demand for ESG-related information is high, however, the ability to meet those demands can be a challenge. Nonexistent ESG reporting standards often leave companies struggling to decide just how far they should go.
The good news is that many of the metrics that fall under the ESG umbrella might already exist within your organization – although they might not be labeled as “ESG.” One department might collect data on, for instance, carbon audits or water usage for separate purposes. Another department might track employee wellness initiatives or the number of minority directors. Knowing what data exists, where it is located, and who owns it can be one of the most difficult parts of ESG reporting.
The trick now is to pull that information together from wherever it currently resides into a cohesive ESG narrative. Companies that use integrated risk management technology to collect all risk-related information in one place definitely have an advantage. Existing data is easy to find and ready to be pulled into a report.
If data is collected in a variety of disparate systems – like spreadsheets – however, locating, consolidating, and building ESG reports will be much more challenging. And the more extensive your ESG reporting needs, the more challenging it will be to keep up.
Either way, though, you first must decide what information to report on. The metrics you choose to disclose should clearly align with the values and purpose of your organization.
While it may be tempting, don’t simply pick the metrics most favorable to you. Report on the metrics that are most meaningful to your priority stakeholders and those that are in line with what your peers are reporting. It’s also important to use the same metrics and methodology year after year for consistency and credibility. What you ultimately choose to report on not only reflects your commitment to ESG principles, it demonstrates your dedication to improvement.
With climate change and other ESG issues increasingly material to strategic risk and opportunity, businesses will face continued pressure to address their social and environmental impact on the world. While specific regulations on disclosures are still taking shape, some mandatory reporting of ESG is all but inevitable. Now is the time to benchmark where you are on ESG matters and prioritize your response.