Future Assured Insights: Positioning your organization for success under a sustainability agenda | Part 3

Post Date
15 January 2024
Author
Michelle Gluck
Author
Carol-Ann Fletcher
Read Time
5 minutes
  • materiality assessment
  • ESG advisory

Part 3: Reporting on what is relevant and what matters

In our first issue of Future-Assured Insights, we discussed what it means to be “Future-Assured”—that is to say, relevant, positioned, and prepared for the evolving complexities of sustainable development. But how exactly do you go about this?

This 3-part series of Future-Assured Insights will walk you through the how—practical, prioritized actions to help your organization develop and implement a go-forward sustainability strategy.

Recall that environmental, social, and governance (ESG) refers to a collective of business relevant factors relating to an organization's relationship with the natural and human environments. These factors, traditionally under-represented or not adequately contemplated, present significant risks and opportunities for organizations and their advisors.

In Part 1 of this Future-Assured Insight series, we discussed the steps that comprise the first stage of your ESG journey—that is, building the foundation of your ESG strategy. In our last Future-Assured Insight article (Part 2), we discussed the steps that comprise the second stage—that is, managing and monitoring what is relevant and what matters by developing ESG-related goals and targets that are fit-for-purpose for your organization and collecting and analyzing ESG data that measures progress against those goals and targets. Now, we move on to the third stage: reporting on what is relevant and what matters.

Step 1: ESG assurance: providing stakeholders and other rights holders with confidence in your ESG-related data and information

Once you have collected, processed, and analyzed your ESG-related data, you should think about external assurance of this data in order to be able to demonstrate its completeness. External assurance provides your stakeholders and other rights holders with confidence that they can trust your ESG disclosures and reduces the risk of critics accusing your organization of “greenwashing”.

Your ESG disclosures may require limited assurance or reasonable assurance, depending on the jurisdictions in which you operate. Let’s break these down:

Limited assurance is the baseline level of assurance and is most appropriate in situations where the risk of a material misstatement is low and the cost of obtaining reasonable assurance is high. Limited assurance is the most common type of assurance that large organizations voluntarily obtain for their ESG-related data.

Reasonable assurance, by contrast, is the most comprehensive and reliable level of assurance and is most appropriate in situations where the risk of a material misstatement is high, and therefore the cost of obtaining reasonable assurance is justified.

Assurance statements should be prepared by independent, arms length audit or advisory firms, and can be incorporated into your ESG performance reports.

Step 2: ESG performance reporting: determining how your organization can best “tell its story”

Organizations need to find efficient, engaging, and accurate means of reporting and communicating their ESG performance to stakeholders and other rights holders. ESG-related data and information needs to be framed in a business context and presented in an authentic and compelling manner. And remember your audience: reporting on ESG performance must be appropriate and relevant to those most interested parties—your key stakeholders and rights holders.

At the outset, you will need to select a ESG reporting framework (or frameworks) to help guide which ESG-related data and information should be disclosed. There are numerous ESG reporting frameworks available, including the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB). These frameworks are evolving to meet the needs of a growing audience and to reflect regulatory reporting updates and changing priorities. For example, SASB has recently folded into the International Sustainability Standards Board (ISSB), which is publishing new standards to comply with International Financial Reporting System (IFRS) requirements.

Ultimately, you should select an ESG reporting framework that is appropriate to your organization, considering the nature and scale of your operations and your audience. Next, you will need to determine the overall theme, narrative, and structure of your ESG report, including identifying the stories, metrics, and data that will be most impactful to your internal and external stakeholders and other rights holders. Finally, you will need to determine how to visually present this information to your audience in an engaging way.

Step 3: Continuous improvement: reflecting on performance and adapting to change

After the blood, sweat, and tears of reporting, your ESG journey will continue. Perhaps you learned through the reporting exercise that changes are required to better identify, prioritize or control sustainability risks, to capture and manage data, or to take advantage of opportunities. It is time to reflect on performance and adapt your sustainability management systems to address these weaknesses, threats, and opportunities.

With continuously evolving requirements, expectations, lists of interested parties, risks, opportunities, data demands, transparency expectations, etc., a robust enterprise risk management system that is built on a continuous improvement platform is an imperative. A thoughtfully designed management system will capture corporate, legal, stakeholder, and rights holder requirements and risks and translate them into a series of control programs and plans, and help you move through a comprehensive review and improvement process. The International Organization for Standardization (ISO) standard for risk management is an excellent framework and foundation on which to build a sustainability management system.

Relying on our collective knowledge and expertise, SLR has the capabilities to support you during all stages of your ESG journey. From building the foundation of your ESG strategy and identifying key ESG risks and opportunities, to developing and implementing the programs and systems required to manage and monitor those risks and opportunities, to reporting on your ESG performance, SLR is a trusted partner that can provide relevant, fact-based evaluations and develop actionable advice to support your continued ESG strategy development efforts.

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