How to approach ESG Reporting

The European Union (EU) and world financial markets are currently experiencing an explosion of sustainability reporting standards, most notably the International Sustainability Standards Board (ISSB, established by the global accounting standard-setter International Financial Reporting Standards, IFRS) and the European Sustainability Reporting Standards (ESRS, an outcome of the Corporate Sustainability Reporting Directive, CSRD). Both link financial reporting statements with sustainability disclosures to strengthen investor protection, reduce greenwashing and ensure reliable and comparable disclosures that meet the information needs of investors and other stakeholders.

Following is a summary of how to approach and implement reporting systems to meet your obligations under these new standards.

Implementing ESG requires strategic alignment at the highest levels of the organisation. This first step outlines how to integrate ESG into your corporate strategy and operating procedures and ensure that sustainability goals are seamlessly integrated into the structure of your business activities and decision-making processes.

Responsibility: BOARD and senior management level

→ review business strategy

→ review brand positioning

→ broadly define company targets

ESG compliance with corporate strategy and business practices requires the following considerations:

• What are the organisation’s goals for the next 5-10 years and is it possible to establish very long-term goals for 2050?
• Which standards apply and which overlaps
• Implications for brand equity, competitive advantage, investor management and risk exposure:
  • for example: financial implications of climate change or regulatory changes
• Extent of influence over your value chain and internal capacities

Creating a Green Team is essential for steering your company's ESG strategy towards success. This team should be a mix of internal leaders and external experts, each assigned clear roles and responsibilities. They will ensure that ESG initiatives are integrated across all departments, aligning with broader business goals and compliance requirements. This strategic composition enables effective oversight, resource allocation, and the fulfillment of sustainability objectives.

→ define roles and responsibilities of each team member

→ division and degree of outreach to value chain (dividing and addressing the value chain)

→ create a budget for all activities

With the selected Green Team in their roles, you should focus on the following:

• Internal management process and authority
• degree of outreach to stakeholders
• Sector benchmarking and best practices
• policy reviews
• identifying the right tools for your organisation
• Budget and time constraints
• identifying possible early actions

Engaging stakeholders is critical for the success of your ESG strategy. This section explains how to identify and interact with various stakeholders, including investors, employees, and community members, ensuring their insights and needs shape your ESG initiatives and strengthen your sustainability commitments.

→ assessment process

→ value chain integration & buy them in

→ beginning with metrics

Stakeholder engagement is always complicated, here's a quick guide on how to do it:

• Design and purpose of a stakeholder engagement process
• Specify roles and responsibilities
• Stakeholder identification and categorisation, developing and implementing an engagement plan
• Engagement analysis, mapping and reporting, and overcoming value chain bottlenecks

Materiality testing helps prioritize the ESG issues that are most significant to your business and stakeholders. This part of the guide provides a framework for assessing and integrating these issues into your ESG strategy, ensuring that your efforts are focused on areas of highest impact and concern.

→ adopt the proper methodology

→ select the metrics and set the targets

→ implications for business strategy and practices

→ sector standards and indicators

Materiality assessment depends, among other things, on the choice of methodology and standards:

• Contextualisation and materiality considerations, and identifying metrics
• Single vs double materiality assessment and application to physical and financial impacts
• Categorising materiality matters, cross-referencing with relevant standards and frameworks, and aggregating assessments
• Reporting materiality including appropriate quantitative scaling and representation

Accurate data collection and rigorous analysis are the backbones of effective ESG reporting. This section describes how to establish robust mechanisms for gathering and evaluating ESG data, which is crucial for tracking performance, informing strategic decisions, and demonstrating accountability.

→ overcoming bottlenecks

→ software solutions

→ due diligence

Data collection is not fully covered by any software, you should make sure you have the right data collection system in place within your organisation and value chain:

• General disclosures, environmental, social and governance indicators and metrics
• Estimations, sector approaches and standardisation
• Leveraging technology for data management and ensuring accuracy, comparability and verifiability

This section guides you through the process of compiling your findings into comprehensive ESG reports. It covers the essential elements of report structure, content, and compliance, ensuring that your reports are not only informative but also meet the evolving standards and expectations of global stakeholders.

→ formatting and structure

→ compliance

→ legal considerations and linkages with financial statements

Communication is real deal in your ESG journey, here is what you should be focused on:

• Using context to create a narrative, transparency and accuracy including legal oversight
• Formatting and combining with financial reports
• Third-party assurance and encouraging internal and external feedback

Sustainability is an ongoing journey that requires continuous improvement. This final step focuses on how to use the insights gained from your ESG reports to refine your strategies, enhance performance, and ensure that your sustainability efforts remain effective and responsive to changing conditions and new challenges.

→ best practices and industry benchmarks

→ long-term target setting

→ strategy implications

ESG is not an end station, but rather a strategic first step towards a sustainability transformation:

• Turning adaptation and transitioning into a pivot
• Sector and organisation forecasting towards increased resilience
• Strategic and competitive implications, and how they interact with monitoring and improvement mechanisms.
• Expected reporting trends across markets