Are you unsure which metrics to include in your Environmental, Social, and Governance (ESG) or sustainability reporting? With the disparate frameworks and a lack of direct regulation, it's easy to feel some analysis paralysis. As a starting point for your reporting, we recommend these ten topics for any company, regardless of size or industry.
Environmental topics
Environmental topics address your company's impacts on living and non-living natural systems, including air, water, and ecosystems. At a minimum, we recommend your company disclose its impacts on greenhouse gas emissions and the management of energy, waste, and environmental risk.
Greenhouse gas (GHG) is a major contributor to climate change and pollutants that negatively impact ecosystems, air quality, agriculture, and human and animal health. Examples of GHG include:
- Carbon dioxide (CO2)
- Methane (CH4)
- Nitrous oxide (N2O)
- Hydrofluorocarbons (HFCs)
- Perfluorocarbons (PFCs)
- Sulphur hexafluoride (SF6)
- Nitrogen trifluoride (NF3)
We recommend you disclose your company's GHG impact, at least in terms of Scopes 1 and 2 emissions:
- Direct Scope 1 emissions come from combustion sources that your company owns or controls, such as fuel burned on-site to heat or power buildings, vehicles, and equipment; or accidental or "fugitive" emissions from chemical leaks or spills.
- Indirect Scope 2 emissions are generated off-site from energy that your company buys, such as electricity, steam, heating, and cooling.
Note: Indirect Scope 3 emissions are from additional assets that your company doesn't own or control, such as vendors used to transport or distribute goods; the processing, use, and end-of-life treatment of sold goods; and investments. To impact these emissions, your company may influence suppliers or choose vendors based on their practices.
Your company may consume various forms of energy—such as fuel, electricity, heating, and cooling–from sources that may or may not be renewable:
- Renewable sources naturally replenish energy over duration, but limit the amount of energy available per unit of time. Examples include wind, hydropower, geothermal, and solar.
- Non-renewable sources are limited in supply and can't be used sustainably. Examples include nuclear power and the "fossil" fuels—oil, natural gas, and coal.
Note: Energy consumption may include activities upstream or downstream from your company's operations, such as how consumers use your company's products, or the end-of-life treatment of those products.
We recommend you disclose information about your company's impact related to energy, and how it manages that impact. Efficient energy usage and the adoption of renewable sources can help reduce your company's environmental footprint and combat climate change.
The production or delivery of your company's goods or services can generate waste, as can upstream or downstream activities such as when:
- Suppliers process materials that your company later uses or procures
- Consumers use your company's services or discard the products you sell
We recommend your company understand and report its waste-related impact, and how it manages that impact. For example, disclose how your company prevents waste generation and manages waste that can't be avoided, in both its own activities and those upstream or downstream from its operations.
When inadequately managed, waste can have a negative impact on the environment and human health, often beyond just the locations where the waste is generated and discarded. Resources and materials contained in waste that is incinerated or landfilled are also lost to future use, accelerating their depletion.
We recommend your company disclose how well it complies with environmental laws and regulations, such as:
- International declarations, conventions, and treaties
- National, sub-national, regional, and local regulations
These rules and regulations relate to any environmental issue that applies to your company, including:
- Emissions
- Wastewater, or effluents
- Waste
- Material use
- Water
- Biodiversity
Note: These disclosures can include information about your company's compliance with applicable laws and regulations, as well as other instruments concerned with environmental protection such as voluntary agreements your company makes with regulatory authorities in lieu of new regulation.
Social topics
Social topics address the impacts your company has on the social systems in which it operates. At a minimum, we recommend you disclose the diversity and inclusion of your company's workforce; the health, safety, and skill development of its workers; and its impacts on human rights.
We recommend your company disclose your company's impacts related to equality—as well as how it manages those impacts—based on indicators relevant to the diversity of its workforce:
- Gender
- Age
- Race
- Inclusion of vulnerable groups
When your company actively promotes diversity and equality at work, it can benefit both the organization and its workers, such as through a larger, more diverse set of potential employees. Greater equality can also benefit society in general, with improved social stability and further economic development.
Healthy and safe work conditions are recognized as a human right and involve:
- The prevention of physical and mental harm
- The promotion of the worker's health
We recommend your disclose your company's impact on its workers' health and safety, and how it manages that impact. For example, to prevent harm and promote health, your company can:
- Demonstrate a commitment to workers' health and safety
- Engage workers to develop, implement, and evaluate the performance of an occupational health and safety policy
- Offer healthcare services or voluntary health promotion services and programs, such as to help workers improve their diet or stop smoking
Similarly, we recommend your company reports its impacts related to employee training and education through:
- Training and upgrading its employees' skills
- Performance and career development reviews
- Transition-assistance programs to enable continued employability
- Management of career endings due to retirement or termination
Your company can impact human rights directly through its own actions and operations, and indirectly through its interactions and relationships with others—including governments, local communities, and suppliers—and its investments.
We recommend your company disclose information about how it identifies, prevents, and mitigates negative impacts to human rights. For example, your company may:
- Perform human rights reviews and impact assessments on its operations
- Implement specialized training so employees can address human rights in the course of their regular work
- Integrate human rights criteria in screening or performance requirements when making contracts and agreements with other parties, such as joint ventures and subsidiaries
Governance topics
Governance topics address the structure and composition of your company, as well as the performance and role of its highest governance body. At a minimum, we recommend your company disclose how it monitors and oversees its sustainability, its business ethics and transparency, and its impacts on data protection and privacy.
We recommend your company disclose the highest committee or position to formally review and approve its sustainability report.
This governance body should also verify that your reporting discloses all of your company's material topics, the topics that most:
- Reflect your company's economic, environmental, and social impacts
- Influence stakeholders' assessments and decisions.
Stakeholders—in addition to the marketplace and international norms—expect your company to adhere to integrity, governance, and ethical business practices. We recommend your company disclose its efforts to prevent unethical and corrupt practices such as:
- Bribery, facilitation payments, fraud, extortion, collusion, and money laundering
- The offer or receipt of gifts, loans, fees, rewards, or other benefits to induce dishonest or illegal activity or a breach of trust
- Embezzlement, trading in influence, abuse of function, illicit enrichment, concealment, or obstruction of justice
We recommend your company disclose its impacts related to customer privacy, and how it manages those impacts. This includes any breach or loss of customer data resulting from a failure to comply with laws, regulations, or voluntary standards regarding the protection of customer privacy.