The aim of this guide is to help small and medium-sized companies (SMEs) improve their corporate sustainability and responsibility in the environmental, social and governance (ESG) fields in practice. With the development of the ESG market, legislative updates and changes in the expectations of customers, partners and investors, the field of sustainability plays an increasingly important role in building a strong and competitive business.
We discussed implementing and communicating your ESG activities in part 7 of our guide. Now, in part 8, we'll guide you through putting together an ESG report. This is where you'll show the real impact of your ESG actions and the steps you're taking towards your sustainability goals.
Preparation of an ESG report
An ESG report (otherwise known as a non-financial or sustainability report) is a report published by a company or organisation that contains information on the environmental, social and governance impacts of the company's activities.
Why write and publish an ESG report?
- It is an essentialt platform for communicating material issues, the company's impact on the environment and people's lives, and activities that help reduce, eliminate or improve that impact
- Helps attract investors looking for companies with sustainable and socially responsible practices while identifying and addressing potential environmental and social risks, thereby increasing the long-term financial stability of the company.
- Demonstrates the company's commitment to sustainability and ethical business practices, strengthening its public image
- Requires internal review of processes, which can improve efficiency and sustainability. The process can also increase employee engagement and motivation by showing how their work contributes to the company's objectives.
Writing a report
In most cases, the first reports describe the process of implementing a sustainability strategy and what led the company to take this first step.
- Define your priorities and set goals. These topics' definitions include a dialogue with stakeholders, described in Chapter 2 of this document.
- Demonstrate the connection between priorities and your business goals and strategy.
- Introduction of the report. Summarise your company's approach to sustainability, the reasons for this approach, or the long-term vision of where your company is heading.
- The core of the report:
- Comment on the key sustainability indicators in each of the three ESG pillars (Environment, Social and Governance).
- Focus on important topics for your company and report according to international frameworks (e.g. ESRS). The content of the report should reflect the set priorities and goals.
- Where possible, a significant topic should include long-term goals in the form of KPIs to make it easy to show progress between reporting periods and how you plan to achieve those goals.
Tips and tricks for writing an ESG report
- Know your data. Collecting suitable data to write an ESG report is one of the most demanding activities of the entire process. This involves collaboration between departments and a designated person who will manage the collection and work with the data. Depending on the amount of data, it is necessary to consider appropriate training for those who will manage its collection or consider the involvement of a third party in the form of external ESG consultants.
- Be consistent. Consistency is important in terms of tracking progress across reporting areas. If your company chose different topics and KPIs every year, it would be difficult for readers to find relevant and meaningful information that would give a real picture of the evolution of the company's approach to ESG and sustainability. Also, remember that the numbers presented in the report must match those reported in your company's other materials (e.g., your Annual Report).
- Adapt the tone of your report. The golden rule of communication is to respond to the needs of your audience. Each audience may require a different communication format. Consider involving other departments in your company and adapt the content of your report for communications with employees, investors, recruitment materials or marketing campaigns.
- Positives and negatives. Don't forget to acknowledge all the positive results as well as the results that didn't go as you expected. Justify them truthfully. This will build trust with your audience and show that you care about achieving your goals. A company that reports donating to charity but ignores the chemical pollution it releases into its surroundings can expect negative media attention. Note that reporting in compliance with frameworks such as GRI requires including all relevant indicators or providing valid reasons for omission.
- Beware of greenwashing. Be honest in your report, and don't try to present yourself in a better light. Misrepresenting data, inventing or exaggerating the positive effects of some of your activities can cost you the trust of your customers, partners and investors in the future.
- Be concise. Few people want to read long reports. Focus on your priority topics and describe them with concrete examples and relevant KPIs. Consider including background information and supporting content with links to where more information can be found. For example, your website can describe a complete picture of what is behind your ESG activities. Your audience will then find only the information they are interested in and won't have to wade through large amounts of data.
Up next in part 9, we'll explore standards and frameworks for ESG. This part will help you understand how to align your ESG efforts with well-known standards, making sure your strategy is both credible and effective.