Stakeholders—including investors, companies, regulators, communities, and non-governmental organizations (NGOs)—look to make socially-responsible decisions based on various Environmental, Social, and Governance (ESG) factors:
Environmental factors pertain to the stewardship and sustainability of natural resources, such as:
- Climate change
- Carbon emissions
- Air and water pollution
- Energy efficiency
- Water management
Governance factors pertain to your company's corporate standards, such as:
- Board composition
- Audit committee structure
- Bribery and corruption
- Executive compensation
- Political contributions
- Whistleblower schemes
You can disclose these non-financial factors through ESG reporting, such as within your company's annual report or a standalone sustainability report. The better your company aligns with positive ESG goals, the better stakeholders consider its long-term sustainability.
Determine material topics and frameworks
ESG is not a one-size-fits-all disclosure; rather, the possible disclosures are numerous and vary from industry to industry. To help organizations report these factors, several institutions formed standards for ESG reporting:
- Global Reporting Initiative (GRI)
- Sustainability Accounting Standards Board (SASB)
- Task Force on Climate-related Financial Disclosures (TCFD)
- United Nations Sustainable Development Goals (UNSDG)
As you begin to assess which ESG disclosures are relevant—or material—to your company's ESG reporting program, engage with executives, board members, and other stakeholders to:
- Verify their commitment to ESG goals and willingness to dedicate resources to the effort.
- Confirm the company's mission and messaging to support and highlight with ESG disclosures.
Tip: To get started, consider the ESG topics Workiva recommends for any company, regardless of size or industry. To identify which topics matter the most to your stakeholders, start with Workiva's Interactive ESG Materiality Assessment Guide. To map materiality based on your industry and sector, refer to the SASB Materiality Finder or Morgan Stanley Capital International (MSCI) materiality map.
Based on the direction of your stakeholder conversations, decide which frameworks to align with. Some frameworks—like SASB—focus on disclosures based on industry and sector, while others—like TCFD—focus on Environmental factors instead of Social or Governance.
Collect and report ESG data
After you determine the frameworks to align with, develop an ESG program to collect their data for material disclosures. When you have the relevant data and values prepared, make them accessible to stakeholders:
- Publish ESG disclosures on your company website and within its annual report or dedicated sustainability report.
- Update current shareholders with your ESG reporting, such as within regular investor outreach.
With connected ESG reporting, you can use standard spreadsheets to:
- Define material ESG framework topics and metrics.
- Curate data for each ESG framework topic and year.
- Automatically calculate values for ESG reporting based on collected data.
Review and benchmark ESG scores
ESG rating agencies—such as MSCI and Sustainalytics—research publicly-available information to issue annual reports about companies' performance. If your company is publicly-traded, it has likely been scored by a rating agency, regardless of whether you actively reported ESG disclosures before. We recommend you use these rating agencies' reports to help identify risks or gaps in your ESG program.
After you determine your company's baseline score with a rating agency and start to report aligned to frameworks, benchmark your performance against peers to identify areas for improvement:
- Compare your company's score to that of your peers'.
- Investigate peers' disclosures to understand what they're doing to drive ESG reporting.