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Reporting is a fundamental part of an organization’s ESG strategy and is often the starting point for prospective investors, customers, and employees to learn about a company’s commitments to environment, social, and governance issues. It shouldn’t be thought of as the end of an ESG cycle, but rather as a snapshot of where the organization currently stands, compared to where it was, and an outlook of where it strives to be.

The hard work is developing a sound ESG strategy and identifying your organization’s priorities in these areas. Once that work has begun, the ESG report starts to fall into place. Developing an ESG reporting roadmap can help your organization visualize that path forward on its ESG journey.

What Do You Need to Develop an ESG Reporting Map?

There is no ESG report without a strong ESG strategy. The focus of ESG efforts should not be on compiling an attractive report, but rather on developing a robust strategy that reinforces the business’ purpose and takes into account ESG risks, impacts, and opportunities. 

Buy-in From Leadership

It all starts from the top. Without leadership setting the organizational structure to facilitate successful ESG strategies, organizations will find themselves swimming against the current. From identifying ESG priorities to implementing data management systems and installing accountability mechanisms, the level of support and buy-in from organizational leadership has a direct impact on company ESG performance.

“The ESG strategy would go nowhere if we didn’t have executive and board level buy-in for it, or without leadership across the organization and employees that are dedicated and intrinsically motivated by some of these issues,” says Chad Reed, vice president of strategic initiatives and ESG at HASI.

Stakeholder Engagement

Engaging with stakeholders, both internal and external, is the next step that will help identify ESG priorities for your organization.

“We had a formal stakeholder engagement exercise done by an arm of our company,” says Pat McLaughlin, chief sustainability officer at Verisk. “They sat down with a group of investors, customers, regulators, employees, and public interests and talked to them about what they thought were the most meaningful things we should be considering if we wanted to be a sustainable business. That helped formulate our strategy.”

Materiality Assessment and Benchmarking

“Our approach to ESG is informed by the principle of double materiality,” says Angela Curry, vice president and chief compliance officer at Bentley Systems. “We identified 19 material issues from the materiality assessment that we conducted in 2022. It was crucial to gain alignment on the narrower focus areas where we could make the largest impact on our business.”

Benchmarking against competitors and recognizing industry standards for ESG priorities will also help determine the areas of focus for your organization. “We look at other companies to see how they’re addressing a specific issue or whether they’re making metrics available on a particular topic,” Curry adds. “We look at companies that are like us or at least in our sector.”

Start Small and Build

It’s impossible to do it all from the start. Focus on the areas of ESG most important to your business and then build from there.

“We’ve been doing this now for almost 10 years. Each year we’ve expanded, added, and advanced the process to address new issues,” McLaughlin says. “It’s been a true evolution. We started off with a very small program and each year we’ve built it up. We have a good handle on the issues — some we’ve addressed very well and others we still have a long way to go.”

Best Practices for Developing an ESG Reporting Roadmap

Identify Important Metrics and Establish Data Collection Methods

Based on the ESG factors that are material to your industry and your business, identifying the necessary metrics to track, measure, and report on will make up the bulk of the substance in your ESG report

“One of the key first steps was to leverage a web-based data platform to track data workflows,” Curry says. “This system was key because our ESG team could systematically identify subject matter experts or find where the data resided for the hundreds and thousands of data points. We could then methodically populate the ESG data management systems to review as baseline metrics for our first year of reporting.” A platform like FiscalNote ESG Solutions can help organizations track workflows and report on their progress.

Put Together an ESG Committee

You don’t need to have a team of employees that are committed full-time to your ESG efforts, but you need a team that can keep your ESG strategy on track and up to date. 

“We needed to find the right colleagues to manage the process of gathering information and data to support the ESG frameworks,” Curry says. “This process was a great exercise to identify and educate key internal partners about ESG. We knew that we had a great story to tell; it was just a matter of getting the right people in the room to tell that story coherently.”

Align with Relevant Frameworks and Standards

One of the more challenging aspects of ESG reporting is knowing which frameworks to report to or align with. If your jurisdiction does not yet have mandatory reporting requirements, it will soon. Making sure your reporting is aligned with the established frameworks will have you prepared for when mandatory reporting arrives.

Depending on your industry, the Task Force on Climate-Related Financial Disclosures (TCFD), Carbon Disclosure Project (CDP), and upcoming International Sustainability Standards Board (ISSB) standards are all critical to familiarize yourself with.

"If a genie gave me three wishes, one of them would be consistency among the frameworks."

Patrick McLaughlinChief sustainability officer, Verisk

Biggest Challenges in ESG Reporting

ESG reporting is not without its challenges. From the lack of framework alignment to the difficulties of data collection, organizations must overcome certain obstacles to accurately report on their ESG initiatives.  

Framework Alignment and Requirements

“The big challenge is the reporting landscape,” says McLaughlin. “Multiple frameworks, multiple points of emphasis, the weights on individual questions change from year to year, some of their analyses are subjective, their rating schemes are esoteric, and the public scores are not really consistent. If a genie gave me three wishes, one of them would be consistency among the frameworks.”

Organizations need to invest time and resources to ensure they understand the requirements of each of the recognized frameworks.

Data Collection

“Once those standards are out there and you understand them, how do you collect the data? We have to rely on our clients to provide monthly or annual reports to us and hopefully, it comes in a timely manner,” Reed says. “Getting data from all the parts of our supply chain is a challenge.”

Supply chain data collection is one of the most difficult aspects of ESG reporting. Employing an accredited data management system that can manage both quantitative and qualitative data will drastically streamline the process and alleviate the data-collection headache.

How FiscalNote Can Help You Chart a Course

With an undertaking as vast as ESG reporting, developing the right plan is critical to delivering the best results. Engaging with stakeholders, assembling an ESG committee, and then identifying material ESG issues and key metrics to track are all primary steps in developing a strong ESG strategy — the foundation that will facilitate a strong ESG report.

There are significant hurdles, however, such as framework alignment and data collection throughout the supply chain. Without personnel experienced in these responsibilities, these tricky phases can block your path forward. The supply chain specialists and regulatory experts at FiscalNote ESG Solutions can eliminate those obstacles and fast-track your path to reporting while providing valuable advice every step of the way.

At FiscalNote ESG Solutions, we empower organizations to take charge of their ESG strategy and stay compliant through technology and expertise. FiscalNote ESG Solutions brings together a combination of an award-winning platform (Equilibrium), a global advisory service, essential ESG intelligence, and a peer community. From helping leading companies measure and manage their carbon footprint, tackle DEI goals, and track ESG regulation, to creating a holistic ESG strategy. FiscalNote ESG Solutions is the best-in-class destination to achieve your ESG goals.