It’s becoming increasingly important for organisations to show transparency with ESG, and 42% of Irish organisations believe ESG is a priority for the next twelve months.
ESG stands for environmental, social, and governance. It’s a set of standards that measure a corporation’s impact on society as well as the environment. The goal of ESG is to make businesses more accountable and transparent.
In today’s climate, organisations are becoming more aware of ESG reporting – environmental, social and governance – and the need for transparency in sharing ESG activities. From environmental issues to diversity and inclusivity, organisations are looking at measuring and reporting these activities to attract investments and stay ahead of regulations and compliance.
Why you should measure and start ESG reporting
Investors, customers and stakeholders are looking more deeply at organisations’ ESG performance and scores.
By embedding ESG practices into your organisation’s procedures, including measuring and reporting on activities, you could see several benefits that encourage business growth.
Some benefits may include:
- Attracting investors and funding – transparency and implementation of ESG initiatives can attract interest from investors demanding more accountability in these areas.
- Improving risk management – adopting ESG frameworks may help your organisation identify and reduce risks while helping with future business planning.
- Boosting business reputation – prioritising environmental, social, and governance factors highlights your commitment to supporting the environment, diversity in the workplace and promoting an ethical culture.
- Reduced environmental impact – measuring and monitoring your environmental impact may help you identify areas for your organisation to focus on and reduce, which could also save energy use and waste costs.
- Complying with regulations – such as cutting greenhouse emissions in compliance with the Irish Climate Action Plan to help reach national net zero emissions by 2050.
Read our guide to learn more about how ESG can benefit your business.
How to measure ESG
ESG should be a key consideration for different operations across your organisation.
Measuring your ESG activity involves several steps, from planning which area to focus on to setting goals and reviewing.
1. Identify what to measure
Decide which area of your organisation you want to focus on; different ESG metrics include:
- Environmental – carbon footprint, waste management and renewable energy
- Social – ethical and positive workplace culture, inclusivity and diversity
- Governance – transparency, leadership diversity, financial reporting and decision making
Think about what you want to measure and find out what your business is already doing in that area. These areas may be priorities according to investor interests, customer interests or opinions of your employees.
Once you’ve decided on the area you want to focus on, gather as much information as possible. An example would be using a carbon footprint calculator to measure your organisation’s footprint.
You could also evaluate existing business processes to highlight KPIs and use that information as the foundation for improvements. Using existing data and information, you can see what your organisation is already achieving and identify areas to work on or implement.
Talk to stakeholders and benchmark
Speak to key stakeholders in the area of ESG you want to improve and develop. They can help give you more insight into your collected information and offer advice on improving it.
You can also benchmark your organisation against others of similar industry and size. Benchmarking may be helpful to see where your organisation stands in specific areas, such as energy use and waste management, and how you’re performing.
Review your information
Review all the information and data you’ve collected, including any advice from stakeholders.
After analysing, use the information to help with:
- establishing a baseline – what your organisation is currently doing or achieving, e.g. reducing your carbon footprint, to help you refer back to these KPIs and prevent falling behind in the development
- identifying gaps – review the information to see if there are any gaps in knowledge which you can follow up on
Set goals and deadlines
After setting your organisation’s baselines and KPIs, you can create goals and deadlines.
Ensure goals and deadlines are measurable, achievable and realistic to create the desired impact.
Your goals may include maintaining ESG activities that your organisation is already doing well, for example, promoting a diverse, inclusive and positive workplace culture. These goals will need monitoring but may not require as much investment to keep up the KPIs.
Your goals may also involve improvements. Areas in which your organisation falls below the baseline may need more investment of resources and time.
Read our guide on how ESG benefits your business.
ESG reporting – how to get started
Transparency is a crucial part of ESG. When reporting to staff, investors or the public, be transparent about your organisation’s achievements and the processes you have in place for improvements.
International standards – such as the ISO 14001 environmental management system and the ISO 50001 energy management system – provide valuable frameworks to monitor, operate and report on environmental and energy activities within an organisation.
To share findings and goals, write an ESG report and make it available to shareholders, staff and investors. Publish it on your website so customers can see it too. It’s essential to be clear and concise about how you address ESG issues and how you intend to show progress.
Communicate your organisation’s ESG report and activities with your employees. Ensure they’re aware of developments, improvements and downfalls to maintain a transparent relationship. Involving your employees can help improve your reputation and help motivate them to work towards the goals. Encourage internal communication to ensure all staff are aware of processes and measures throughout your organisation.
End-to-end transparency can help investors and customers trust your organisation by showing your organisation’s commitment to improving ESG factors and being honest about it.