The world is warming up faster than initially thought, and the bad news is that most methods that have been adopted to address the challenge have failed. The Kyoto Protocol was the most recent and few member states were able to achieve their emission reduction targets. However, it appears that most of the strategies adopted earlier were general and their actualization at the grassroots was, say, challenging to implement. Now, we have a solution that is workable, easy to implement, and self-driven: ESG sustainability reporting.
The big question that people have been asking is, “can sustainability reporting achieve where other protocols have failed?” The answer is “yes” and we are going to demonstrate how.
What Exactly is ESG Sustainability Reporting?
ESG sustainability is the process of disclosure of a company’s information in three main areas, the environment, social and governance. It captures the conscious and thought-out activities that companies plan for to become sustainable. This implies that the process must follow a conscious process starting with the appreciation of a company’s risks and opportunities in matters related to sustainability and taking a conscious path to address them.
ESG sustainability reporting is stakeholder-driven because it culminates in the publishing of a sustainability report for them. These stakeholders hold very important positions in the company operations and success. For example, investors want to read the sustainability report to decide if to work with your company or not. Customers, staff, community, and conservation organizations also want to see the report and only get associated with a company that is responsible for its action. Efforts to curb global warming are the first thing that stakeholders check.
How Sustainability Reporting is Helping Address Global Warming
The efforts to use sustainability reporting to push, not just a greener economy, but a more just society, is gaining momentum. By the end of 2020, more than 90% of S&P 500 companies were releasing their annual reports. More are now joining the fray:
- The Process Targets Businesses, which are the Main Polluters
The process of ESG sustainability reporting is directed at businesses and organizations. These are the organizations that contribute the highest levels of pollution. Therefore, making them change by cutting emissions will not only reduce global warming, but also set the pace for other enterprises.
- It Pushes for More Resources to be Directed into promoting Sustainability
As we indicated earlier, the process of ESG sustainability reporting is conscious, meaning that you need to plan for sustainability. If it is cutting down emissions, a company must identify it through materiality assessment and fund the process of recovery. This can be installing new machines, changing raw materials, or better maintenance. All of these tasks require funding, which means that more resources will be directed at fighting global warming.
- It is Becoming Mandatory
Although the process of ESG sustainability reporting is largely voluntary, it is becoming mandatory. If you take the example of the Hong Kong Stock Exchange (HKEX), the listed companies must produce annual ESG reports. Since listing is an important thing for a company, compliance becomes mandatory. Now, more entities are working on making ESG sustainability reporting mandatory. For example, the UK and New Zealand administrations are considering making ESG sustainability reporting mandatory.
As you can see, ESG sustainability reporting is becoming a major thing for a business to succeed. Therefore, you must aim to get it right not just because it is helping address global warming, but also because it can set your business on a path to success.
To start ESG sustainability reporting correctly you should make sure to have the right software for the job because it can be pretty complex trying to handle the task manually. Visit Diginex.com now to see the full list of best sustainability reporting software that you can use in your organization.
