5 Simple Steps to Start an ESG Integrated Reporting Program

A robust ESG strategy can reduce the risks faced by an organization and increase opportunities, directly impacting the company's performance and valuation.

A robust ESG strategy can reduce the risks faced by an organization and increase opportunities, directly impacting the company's performance and valuation.

With the high standards organizations face today, reporting ESG-related performance information is no longer an add-on but a requirement. Currently, 95% of S&P 500 companies publish ESG information.

Despite their popularity, which will be on the rise now that executive compensation is beginning to be tied to an organization's ESG performance, sustainability strategies can be challenging as they go beyond the institution to encompass stakeholders as well.

Here is a practical guide to starting a comprehensive ESG Integrated Reporting strategy.

1. Define

Clarify the purpose, goals, and roles within the strategy. For that, answer:

• Why: What is the purpose of the reporting program? Define clear, realistic, and relevant goals.
• Who: Who are the stakeholders, and what role will they play in the ESG program?
• What: What ESG information do stakeholders require? What metrics and topics will you report on?
• When: When will ESG information be shared? For example, annually
• Where: Where will ESG information be shared? For example, in an annual report, on the website, in a webinar or video, etc.
• How: How will the ESG program be managed? How will ESG reports be prepared and shared?

2. Prepare

• Program structure: Establish the ESG program by defining key roles and responsibilities.
• Stakeholders: Create a stakeholder map. Identify what information each stakeholder needs.
• Data: Collect preliminary internal ESG data to identify potential gaps. Decide how to address gaps.
• Reporting frameworks: Determine which reporting frameworks and standards you will use.

3. Evaluate and Measure

• Materiality Assessment: Define materiality by stakeholder group. Consider both inside-out and outside-in to determine metrics and topics:
  
  • From the outside in: Financial materiality refers to the impact that ESG criteria
    could have on the company's value creation.
  • Inside-out: The impact a company has on people and the planet.
• Collect data: Collect data over time in ESG management software, creating a historical memory of the organization's sustainable performance. Consistency and traceability of information are very important.
• Assess ESG risks and opportunities: Analyze data to identify ESG risks and opportunities; this will bring the program to life over time.

4. Execute

• Set improvement goals: Define realistic, measurable, and actionable objectives for
  identified ESG risks and opportunities.
• Justify action plan: Use the information gathered to justify the ESG plan.
• Execute improvement plans: Carry out improvement plans. Delegate specific tasks to those responsible.
• Track progress over time: Evaluate results to track progress over time.

5. Communicate

• Be accountable: Demonstrate your commitment with concrete and measurable objectives.
• Lead by example: Be honest about the steps you are taking to achieve your goals and how you plan to achieve them in the future.
• Know your audience: Some stakeholders will need detailed technical information, while others will need to understand progress. Be sure to tailor the story and information provided for each audience.

How to carry out these steps rigorously?

Working with ESG criteria successfully requires efficient data collection and processing. Two processes that most organizations struggle with because disclosures involve both quantitative and qualitative data. Thus, a space where both can be housed is essential.

For this purpose, ESG management software is available to record, organize and support the metrics and information to be incorporated into the report, allowing for simplified analysis and writing processes.

We summarize six features of reporting software must-have for an excellent Integrated Report.

1. Future-proof: Robust and flexible solution that evolves with emerging requirements.
2. Complies with international standards: Handles various regulations, both mandatory and voluntary disclosure.
3. Data consolidation capability: Robust analytics tool to integrate financial and non-financial information, providing a single storage location that enables the construction of institutional memory.
4. Report generation: Ability to transform stored data into useful information for decision-making. Integrating with other tools and allowing the information to be exported in different formats.
5. Easy collaboration: Different teams within the organization can work with the same data. Allows the inclusion of suppliers and third parties.
6. Data anomaly detection: Ability to detect data "out of the norm" and report them to avoid non-compliance and explain eventual anomalies.
   
   A final recommendation is to appoint a full-time manager to coordinate the internal activities to be carried out, who will also be an evangelist of the ESG culture.

How does M-Risk help?

A smooth process and obtaining the desired results depend on the quality of the tool used. M-Risk's digital Integrated Reporting solution allows the entire report-building process to be carried out according to international standards, providing methodology, consistency, and simplifying the task.

Request a guided demo of the solution here.