Good ESG Practices + Poor Communication = Zero ROI

If you are like us, every time you open LinkedIn there is a post about ESG near the top of your screen. For the uninitiated, ESG goes beyond reporting simple sustainability efforts and examines environmental, social, and governance initiatives by a business. More and more, companies are investing heavily in these focus areas.

Is your company getting the credit it deserves for its ESG investment? With the amount of resources being directed at ESG as of late, ROI is a critical question. Amazingly, many companies do not have a clear answer to this important question.

For decades, annual reports evolved to create an ease of comparability between companies – a primary function of financial reporting. Today there is no playbook for reporting ESG performance, and for companies that want to gain first-mover advantage, this presents a great opportunity to shape the ESG reporting landscape and be a leader in this growing space.

In Europe, companies have begun issuing ESG reports, calling them “non-financial reports,” along with their annual financial statements. This supplementary data aims to quantify the inputs and results of a company’s ESG efforts, and help decision makers understand how these decisions are shaping both financial performance as well as how the stakeholders are impacted. Our Public Relations Global Network investor relations partner in Germany, cometis AG, co-sponsored a review of European practices in ESG reporting. Not surprisingly, many companies scored low in the analysis.

The best reports highlight:

• Company vision and values
• Qualitative goals and objective data
• Clear and transparent goals and metrics
• Dilemmas and controversies facing the company
• Quantitative metrics, such as:
  • How employees are classified (full time, part time, contract work)
  • Hours and money spent on training
  • Percentage of staff and management by gender and diversity
  • Number of disabled people who work there
  • CO2 output comparing year-over-year
  • How much water is consumed
  • Qualify and quantify wastewater produced
  • Quantify the use of recycled materials

Lack of clarity combined with high emphasis on organizational stakeholder well-being has led to confusion around ESG reporting. If you are in the majority – those who have not developed a framework around reporting on ESG results – don’t feel bad. This is actually a great time to start forming reporting standards that will give company leadership, investors, employees, and outside stakeholders visibility on your ESG efforts, and most importantly – results.

Connect with us if you would like to learn more about how your company can more effectively convey your ESG message, improve relationships with stakeholders, and ultimately boost the bottom line.