Why do ESG reporting? Top 5 good reasons

Understanding the reporting context

We are experiencing a climate emergency, and understanding environmental and social risks has become increasingly important for businesses and for investment decisions.

‍ESG criteria are now an integral part of risk management strategies, and following ESG indicators allows companies to improve their social and environmental impacts. But the benefits of ESG reporting don't end there! Here are our 5 good reasons for doing ESG reporting.

But first, let's go back to the basics: what does ESG mean and what is ESG reporting?

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What does ESG mean?

ESG is an abbreviation (Environmental, Social and Governance) that is commonly used to refer to all extra-financial impacts of businesses, such as greenhouse gas emissions or the control of health and safety risks for employees.

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What is ESG reporting?

ESG reporting consists of disclosing information aimed at transparently showing the performance of a company in three key areas: environmental sustainability, social sustainability and corporate governance.

In order to promote the transition of capital and investments towards more sustainable models, The European regulator has considerably tightened the rules applicable to financial actors, requiring them to communicate transparently about the impacts of their investments.

In order to be able to meet these obligations, investors rely on ESG reporting data in order to make their investment decisions or to analyze the impacts of the companies in their portfolio, thus pushing a growing number of companies to implement ESG reporting.

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The 5 good reasons to implement ESG reporting

1 - ESG reporting improves the attractiveness and competitiveness of the company

‍Stakeholders' expectations in terms of extra-financial performance are exploding everywhere: employees, customers, business partners, investors. Everyone expects companies to better monitor and better manage their impacts. Setting up ESG reporting makes it possible to meet all of these expectations, and thus to strengthen its attractiveness and brand image.

Conversely, businesses that do not do so are likely to suffer the consequences:

• Loss of customers and markets
• Lack of attractiveness for new talent
• Loss of confidence among investors who prefer to invest in companies that measure their risks.

Carrying out ESG reporting is therefore a guarantee of significant trust for stakeholders. In this article, we share with you the 3 steps to get started with ESG reporting.

2 - ESG reporting makes it possible to identify and anticipate risks for the company

The risks associated with extreme climate events that are about to increase or to modern slavery in supply chains are among the biggest risks that businesses face. Businesses that implement ESG reporting can anticipate, identify, mitigate, and address vulnerabilities before they become a problem, by implementing sound environmental and social strategies based on ESG reporting data.

3 - ESG reporting reduces operational costs

ESG reporting allows companies to collect reliable ESG data, and thus enable them to make more effective and strategic decisions about budget allocations. And therefore reduce operational expenses such as energy, water or waste costs.

4 - ESG reporting limits the risks of unintentional greenwashing

Companies that do not implement ESG reporting are not transparent with their data. Or those who focus on the wrong indicators (or indicators that are not relevant to their sector of activity), and who therefore report on erroneous data, have a higher risk of being accused of Greenwashing. Following the right ESG indicators can help businesses prevent this risk.

Implementing ESG reporting within the company allows you to cultivate a culture of transparency around data and therefore strengthens the trust placed in your brand from investors, employees and customers. When you start your ESG reporting, remember that transparency and the continuous improvement of performance are more important than perfection.

5 - ESG reporting makes it possible to anticipate regulatory requirements

ESG regulations are becoming more and more stringent and numerous (Like the CSRD), and the publication of ESG data is gradually becoming mandatory for all companies. Get ahead of the curve, anticipate regulatory requirements, and start preparing your ESG reporting before it becomes mandatory.

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How to set up ESG reporting? Ditto is here to help

Set up your ESG reporting strategy with Ditto to easily collect, analyze, and use your company's ESG data.

• Structure and automate low value-added tasks like data collection.
• Reuse the data collected for all your needs: certification, communication, ESG reporting.
• Track your progress and make the right decisions to improve your impacts and limit your risks.