Corporate sustainability and environmental, social, and governance (ESG) are back in the spotlight. As proponents of both, we don’t agree with the rhetoric that’s generating the headline attention, but perhaps it’s what’s needed to move forward in a meaningful way. Criticism, when thoughtful and constructive, typically leads to better outcomes.
In the United States, where both practices are significantly behind other developed markets, the Security and Exchange Commission (SEC) has begun to investigate several facets of corporate sustainability disclosures and reporting. We’ll walk through how to develop a roadmap for getting (and staying) up to date with your disclosure and reporting.
Disclose and Report
The SEC’s focus on the elimination of greenwashing is a much-needed step in the right direction, as the real substance of corporate sustainability and ESG topics is still confusing to some.
The regulator’s proposed climate and greenhouse gas disclosure rule, which is expected very soon, is the strongest indication of the seriousness of the issue. However, with the regulatory landscape in flux and the SEC’s climate disclosure rules pending a final version, some companies are reluctant to be transparent about their sustainability initiatives for fear of additional scrutiny or backlash.
Now, every company is different, and given the economic environment in which we find ourselves, decisions about what to do from a corporate sustainability and ESG disclosure and reporting perspective will vary. For those playing possum, however, we must pose the question: Corporate sustainability and ESG investing have been practiced for decades by the largest companies and asset managers in the world. Why?
Doing Business Well
Because it’s good business. You want to think about it in terms of risk mitigation in the face of climate change, extreme weather events, and access to natural resources. Or you could consider it identifying new revenue streams and opportunities to streamline operations, enhance efficiency, and reduce costs. However you get there, in the end, it comes down to self-preservation.
If your company is in limbo and you’re unsure about which direction to steer in this turbulent time, this post is for you. Below we outline how to start or advance your sustainability initiatives, disclosures, and reporting so that all stakeholders are satisfied.
Do – Actions to Take
If you haven’t already, it is important to perform a materiality assessment. This process will identify the ESG issues most material to the success of your business and their importance to internal and external stakeholders alike. At Longview, we can also highlight the degree to which certain issues are within the company’s ability to influence or control; this can help inform strategy and resource allocation.
Disclose – What to Report
There are several internationally recognized frameworks for disclosing sustainability information, such as the ISSB standards and Global Reporting Initiative (GRI).
The frameworks with which an organization chooses to report depends on the organization’s business activities and the stakeholders it is looking to reach. Our guide to Sustainability and ESG Reporting dives into more detail on that choice.
The reasons that organizations should disclose this information are infinite. In the simplest of terms, disclosure helps organizations formalize initiatives and determine which data and information should be tracked and reported.
Communicate – What to Say
Communication is key in this current environment where what you choose to say (or not say) can have regulatory and customer loyalty implications.
Disclosure to organizations like CDP and your sustainability report are the big-ticket items, but if you “do” and “disclose” those merely reflect one instance in time and the information is often backward-looking. Ongoing communication allows you to update your stakeholders about progress, milestones, and new initiatives material to your business.
Given its increasing prominence in business and the evolution still to come, ESG disclosure and reporting and corporate sustainability communications are complex. They require a specialized knowledge and skillset to achieve each business’s desired results.
If you are interested in learning more about how we can work with your company to ensure it’s in the best possible position for success, please contact us.
