It’s no secret to those within the environmental sustainability and corporate responsibility space that attention on environmental, social, and governance — or ESG — data is growing.
This increased focus has not only driven ESG action but subsequent reporting. As of 2021, 96% of the top 250 global companies — determined by the Fortune Global 500 — report on sustainability, up from 64% in 2005, as reported by KPMG.
“The question is increasingly becoming not if you have an ESG strategy, but whether it’s appropriately sophisticated, validated, and bold,” Scott Flynn, Vice-Chair of KPMG’s U.S. Audit Practice said in the report.
The KPMG study also states that as sustainability reporting becomes the norm for large enterprises, integrating reporting — or reporting corporate financial and sustainability data together — is also rising.
Despite the recent growth of ESG reporting, out of the top 250 companies reporting on sustainability, only 22% have produced integrated reports.
Having your company’s ESG work highlighted in a 10-k or proxy statement can be a watershed moment for your sustainability program, and looming regulatory requirements make this integration a matter of “when” not “if” for major enterprises.
Yet, while this integration can present new opportunities, it also carries potential liabilities, a ton of new work, and necessary alignment across business units.
As a senior CSR or sustainability leader, how do you begin to integrate ESG data into your regular financial reporting?
Outlining your first steps
One Fortune 500 enterprise that has successfully integrated some ESG data into its financial disclosures is the transportation and logistic company, C.H. Robinson. The effort was led by Brittany Brama, Principal Sustainability Program Manager.
Brittany shared some advice for those taking this up for the first time during a recent CSR Board panel discussion on ESG data collection, reporting, and management in an enterprise environment.
“It’s really important to start small,” she says. “Go ahead and start with those smaller disclosures. That will make you successful in the long run.”
C.H. Robinson included what Brittany says was a “substantial” amount of ESG data in its most recent 10-k, as well as its proxy statement. When determining what data to include, Brittany encourages a storytelling approach.
She said C.H. Robinson’s report told the story of what ESG means to the brand, outlining its governance structure, sustainability targets, and current progress, which includes hitting the halfway point of its goal to reduce carbon intensity by 40% in 2025.
At the start of this process, Brittany says she began by looking at the internal stakeholders.
“Look to internal experts — the people who are already providing support for your current disclosures,” she says. “That might be those who are leading your financial reporting.”
She encourages ESG leaders to search for overlap in their team and their financial team’s processes so that both business units can benefit. Getting integrated reporting off the ground will require alignment across various departments, such as legal and financial.
“It really helped us to partner together with these other divisions or departments to develop that relationship and start knowledge sharing. It’s been such a wonderful experience for us,” Brittany shares.
Additionally, Brittany says it can be beneficial to leverage the existing resources within the enterprise. Perhaps, your financial team already has a consultant on board that could assist with ESG data and provide suggestions on where to start integration.
“Those folks have a ton of white papers, they have a ton of examples, and really leaning on those experts that your company or firm already trusts is going to be really important,” she says.
It will be helpful to continue this alignment when determining the timeline of your reports. Those leading ESG may attempt to strategically time their data collection with the organization’s annual reporting — whether it be proxy or 10-k.
Gaining leadership support
The need to drum up leadership support for integrated reporting may not be a necessary step for every CSR leader. In some cases, the push may even come from the top down.
Still, if you are a leader in the process of gaining C-suite support for integrated ESG reporting, Brittany says it’s important to first understand what your executives and other stakeholders are expecting.
It can be a challenge to assign a numerical ROI to this undertaking, so it’s essential to effectively communicate the benefits of producing integrated reports.
“Just understanding what the landscape looks like,” she says. “What kind of value is brought to internal processes, understanding that we are making sure that the storytelling aspect of everything is in the full picture. That was very big for us to make sure that we’re capturing all of that value in our communications.”
Finding peer-to-peer support
ESG is a quickly-evolving field within the CSR space, and as a result, no one has all the answers. As the processes around ESG data and regulatory requirements continue to grow and change, it can be helpful to benchmark strategies with a group of peers.
During the ESG panel discussion, one of Brittany’s peers, Claudia Lin, CSR Program Manager at NVIDIA, shared how she leverages the CSR Board to benchmark strategies with fellow industry leaders.
“The CSR Board has been super helpful in connecting with other companies and just getting some honest feedback,” Claudia says.
The CSR Board community is the one place you can go to for unfiltered, unbiased opinions from your peers who lead social responsibility and environmental sustainability at billion-dollar enterprises. Learn more about how membership can help you navigate ESG reporting protocols here.
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