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.
Part 4 of our ESG guide showed us how to identify and engage with stakeholders. Now, in part 5, we're focusing on collecting and reporting your ESG data. This step involves gathering the necessary information on your prioritized material topics to prepare for effective reporting, following guidelines like the ESRS and possibly incorporating entity-specific indicators.
Collecting and reporting your ESG data
Based on your prioritised material topics, you can then start collecting data on your material topics to prepare for reporting. The ESRS provides indicators for companies to report on all material topics. If the company identifies a material topic that the ESRS does not cover, entity-specific indicators should be added.
Data collection will require the following steps:
- Create a data table in Excel containing all material indicators. As a basis for this, you can use the Excel table of ESRS indicators that EFRAG has prepared. Delete any indicators that are not material. Ensure you do not delete any mandatory indicators in ESRS 1. Note which indicators are required and which can be phased in.
- Conduct a gap analysis to determine which indicators you are already collecting within your company. Are you collecting the data in a sufficient level of detail? Can you document your methodologies and assumptions? Are you collecting data for all locations and countries of operation? Get a complete picture of where the gaps are.
- Assign responsibility for data collection. Decide who within the organisation will be responsible for which indicators. For this task, you can form an ESG team of specialists from across the company. Such a group could contain people from HR, operations, supply chain, manufacturing, procurement, risk, and finance. Note that some indicators are qualitative, and some are quantitative, and a wide range of skill sets and knowledge will be required to collect them.
- Create a centralised data collection system. Some companies collect their data in a shared Excel sheet, a low-cost option that can lead to errors. A centralised IT system for data collection that can be used across all operations is the best choice if possible. Such a system will ensure data is collected in a consistent format, and will reduce error.
- Get external help if needed. If roadblocks are met in the data collection process, external experts can be brought in to help. For example, calculate the carbon footprint and other environmental data or set up a specialised ESG data IT system.
- Prepare your report. Once all data is collected, you are ready to prepare your first ESG report. This can be done according to the GRI or, if required, the ESRS.
Examples of ESG material topics and indicators
In part 6, we'll move on to setting your ESG goals and indicators. This is where we start translating your ESG material topics into actionable goals and measurable indicators for your business.