ESG Audits and Disclosure – Do’s and Don’t

Having a right ESG Audit and compliance areas are very important for the disclosure.

It’s now an important part of Investor Relations Report and Sustainability Report.

Its integration into the company’s core operations is a key to produce impactful data.

Lot of attention is being given by the financial authorities in this subject.

ESG disclosures are voluntary and it’s a standard across the globe. So in a way it’s easy to ensure standardization in what is reported.

Most of the listed and unlisted large companies have started integrating ‘just’ the ESG concept. They are yet to create a process around it and integrate it deeper into the core values. There are many parameters under ESG which must be clearly stated as it helps Investors and external auditors in decision making and also create a particular perception.

We can tell you how your company is doing by just reading your sustainability or ESG report. Are really doing something and if your operations are managed well or you just talking the talk through adverbs and verbs and adding pages which are of no use to anyone.

It all voluntary though. Following points are important ones, from a very long list of advisory on how to publish a Good meaningful ESG Report.

Do’s

  • UNSDGs are good way to measure up to the ESG.
  • There are 17SDGs which include 173 -200 clauses, it’s a crazy long list, therefore a right strategy of what must be included according to the strategic relevance is crucial.
  • Define very clearly the scope and boundaries of audits and what will be reported with right facts and figures.
  • Define the KPIs
  • Steering committees and subcommittees must be strongly governed for data collections and executions of ESG strategies
  • Do spend more time in defining ‘Materiality’
  • If it’s the 1st or 2nd year of reporting, do mention a 5 year plan for 100% of ESG factors integration and better walk the talk.

Don’ts

  • The Team managing the data must be careful on extrapolations and assumptions.
  • Reasoning for each assumptions and extrapolation must be documented.
  • Volume of texts are very long and voluminous which is cumbersome to read.
  • Define numbers and not just use the verbs like most, largest, almost, sometimes, usually kind of phrases.
  • Don’t be excessively optimistic and write essays of stories of what will be.
  • Don’t follow and agree blindly all external analytics data. Please verify yourself, it’s your company’s data.
  • Polices are not just for the walls, but to ensure the % impact as a result of creating such a policy is more important for ESG disclosure.

ESG Disclosures is not just another Sustainability report where you can just write wishful optimistic essays of how you feel and shall do in future. Please don’t do that. Numbers talk more than texts and have more visual impact on branding credibility.

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