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ESG Adoption & It's Rising Trends In Financial Markets

In today’s world, businesses are increasingly focusing on their environmental, social, and governance (ESG) impact. In order to bring transparency in business operations, companies are turning to ESG reporting, which dives into their influence on the environment, social responsibility efforts, and overall governance practices. This information is crucial for investors and other stakeholders to make informed decisions about the businesses they support.

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ESG disclosure, similar to financial reporting, serves as a communication tool. It allows companies to inform stakeholders about their approach to ESG issues, promoting transparency and accountability. While ESG reporting is traditionally viewed as an external communication tool, the process itself offers significant internal advantages. Engagement in ESG reporting can enhance a company’s comprehension of its environmental, social, and governance risks and opportunities. This fosters a continual cycle of improvement, allowing the company to proactively address these factors and strengthen its overall sustainability.

ESG Reporting: Background Check & Growing Relevance

Consideration of ESG factors in investment decision has become popular since the UN Principles for Responsible Investment (PRI) released in 2006. This initiative aimed to boost sustainable investing and started with 63 investment firms managing $6.5 trillion signing on. By June 2019, ESG investing had significantly grown, attracting over 2450 signatories with more than $80 trillion in assets under management.

The importance of ESG criteria is steadily rising. Major institutional investors are increasingly signalling their expectation of robust ESG commitments from the companies in which they invest.

Core Steps in ESG Reporting

  1. Maturity assessment
  • A valuable precursor to the reporting process that enables the company to understand its current state of ESG implementation. It identifies areas of strength and weakness, allowing the company to set goals and develop strategies for improvement.
  • It provides a context for the reporting by revealing the company’s starting point and its progress over time. 
  • It helps to highlight areas where data collection for reporting might be weak or non-existent. This understanding helps companies focus their data-gathering efforts and prioritize what information to include in the report.

2. Materiality Assessment

Materiality assessment is the cornerstone of the ESG report. It helps to zero in on the key environmental, social, and governance issues that matter most to the company and its stakeholders. This keeps the report focused and allows efficient resource utilisation.

3. Strategy & Goal Setting

Leveraging the insights from the materiality assessment, a well-defined ESG strategy can be established which outlines the company’s approach to tackling the identified key issues. Additionally, the strategy will encompass the formulation of measurable goals to gauge progress towards achieving the sustainability objectives.

4. Select an ESG Reporting Framework

There are different ESG reporting frameworks available such as GRI and SASB, which offer blueprints for structuring the report and required information. These frameworks also ensure the report is easily comparable. Companies should select the framework that is best suitable for their industry.

5. Measuring KPIs

KPI measuring has two stages in ESG reporting:

  • Data Collection and Management is the foundation for KPI measurement. In this stage, data is gathered on your ESG performance across the material issues identified in the assessment. This data collection entails the development of methods to track the specific metrics that correspond to your predetermined KPIs.
  • Reporting and Communication is where your KPI measurements take centre stage in the ESG report. The data you collected on those KPIs becomes the key evidence to show your progress on the ESG goals you set. The report should transparently communicate how your company’s performance aligns with the predetermined KPIs.

6. Verification and Assurance (Optional):

  • While not required, getting an independent third party to check your ESG data and reporting can boost the believability of your report. This step is especially valuable for larger companies or those in industries with stringent regulations.

Streamlining Your Sustainability Journey with SAMESG®

SAMESG® isn’t just another ESG platform; it’s a comprehensive companion designed to empower companies on their path to environmental, social, and governance excellence. Here’s how SAMESG® can transform your approach to sustainability

  • Uncover Your Priorities:SAMESG® guides companies through a thorough Materiality Assessment, pinpointing the most critical ESG issues relevant to the industry and stakeholders. This ensures the company’s sustainability efforts are focused on the areas that matter most.
  • Align Goals & Actions:Based on the materiality assessment, we help companies to establish clear Key Performance Indicators (KPIs). These KPIs translate the company’s ESG strategy into measurable objectives, allowing them to track progress and demonstrate impact.
  • Effortless Data Management: Our solution simplifies data collection, tracking, and monitoringof a company’s ESG performance. This eliminates manual data entry and streamlines the process, saving valuable time and resources.
  • Real-Time Insights:Our comprehensive solution provides intuitive dashboard reporting These dashboards offer a clear and concise overview of ESG performance, allowing companies to identify areas for improvement and celebrate their achievements.
  • Transparency Made Easy:We empower companies to generate comprehensive Sustainability Disclosures. These disclosures ensure transparency with stakeholders and meet regulatory requirements, showcasing their commitment to ESG best practices.
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Are you struggling to select the appropriate ESG reporting software? Not anymore!

We offer the SAMESG® Solution, a sophisticated and advanced ESG platform that simplifies your sustainability reporting process. We offer you support for various ESG frameworks and assist you in automated decision-making.

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