ESG Reporting is here to stay
ESG reporting has developed into an essential factor in assessing ESG initiatives and communicating on sustainability commitments, and COVID-19 has only stood as a catalyst for this trend. The pandemic has demonstrated to the market that the easily neglected ‘non-financial’ factors are equally as important to long-term sustainability of businesses as any financial factors. Despite the economic uncertainty that has arisen as a result of the pandemic, neither investors nor companies have budged in their efforts in ramping up their ESG management and reporting. In fact, it is quite likely that COVID-19 will further push stakeholders to streamline their approach to both ESG management and reporting. We stand at a point where interest in ESG is at an all time high and GRESB sees no end in sight.
It is truly an exciting time to be a part of the movement towards knowledge sharing and harnessing new opportunities as means of managing and reporting towards ESG factors.
Nonetheless, there cannot be rainbows without a little rain. Although ESG reporting is becoming more and more mainstream, the industry as a whole is still in its infancy stage of the whole sustainability movement. There currently exists a plethora of international reporting standards; varying companies use varying standards and to pile onto that, the haphazard mix of international frameworks and standards hinders data consistency. The industry is missing a systematic global platform for making ESG data readily available, which reduces the opportunity for transparency, reliability, clarity and comparability. The key is to make it easier for companies and investors to compare, analyze and interpret the data and one way in which the industry is seeking to address these problems is through the implementation of ESG reporting technology.
Ultimately, the current reality is that ESG reporting is a complex space, and it can be a burden for a company to report to multiple frameworks, but with a strong data foundation in place, a company can set itself up well to meet reporting requirements regardless of whether a global framework comes to fruition.
Navigating the Complexities of ESG reporting with Tech on our side
As we have come to realize, ESG reporting is a fundamental component of the entire ESG value chain and the complexities of ESG reporting imposes a lot of challenges in terms of effective sustainability disclosure. This is where reporting technologies come into play. Reporting technologies can streamline the process of data collection, storing and processing and ultimately improve comparability, accuracy, clarity and reliability.
Appropriate use of technology can be identified as a tool that can assist in many aspects of ESG beyond just the general reporting; landlord-tenant engagement; meaningful and useful analysis of data; and nudging positive behaviours in the use of buildings are a few of many additions.
ESG technologies no longer need to be limited to reporting alone, but can also help achieve sustainable development by enhancing the efficiency of resource utilization, operational performance, decision making and risk evaluation. With technology as catalysts, we could collaborate more effectively to shape a more sustainable world, in hopes of improving sustainability performance of companies and cities and enhancing health and well-being of our populations. Technology will play an integral part in pathing the future of ESG reporting.
The Future of ESG reporting
Universal disclosures are on the horizon.
In the absence of an unified reporting standard, there is a lack of structured base references for companies and investors to benchmark at the global level. Looking into the crystal ball of ESG reporting, the industry must foster and adopt collaboration, standardization and technological advancements to continue to equip investors, policy makers and companies with the tools required to bolster sustainability reporting. Future ESG reports should move towards a more comprehensive and holistic approach, alongside holding the report users to higher accountability and responsibility.
As we transition towards a post-COVID world, one can expect to see economies and corporations shifting towards further prioritizing sustainability and incorporating ESG in their operations. Although more organizations are now promoting ESG and more ESG-conscious investors are emerging, they are still not enough to drive strong change in the sustainability reporting ecosystem. Global cooperation is required to bring in a unified, systematic and coherent reporting system on an international platform, while regulations from governments are needed to impose mandatory responsibilities and pressure companies.
It is time to answer the call for a global standard to satisfy the needs of a wide range of stakeholders including investors, companies, boards and the general public.
This article was written by Alexander van Zyl, Marketing and Digital Specialist at GRESB
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