Publishing your company sustainability report creates a competitive advantage and offers considerable financial benefits too. Across every sector, businesses are being challenged to demonstrate they are not greenwashing, and that they are compliant with the new regulatory environment, so where – and how – do you begin?
You’ve seen corporate sustainability reports, and you’ve heard of carbon reduction plans and carbon emissions, but did you know there’s a global framework for encapsulating all that is positive about your business? This works for businesses of any size, and it’s equivalent to an ISO certification if approached correctly.
Since 2004, ESG (environment, social, governance) has evolved into the leading standard, enabling businesses to report under a variety of applicable frameworks, such as the GRI from the Global Reporting Institute. Larger businesses must also comply with similar but more complex TCFD (UK) or CSRD (EU) regulations. In short, ESG is about non-financial reporting, but the results fit into your annual report, no matter if yours is a small SME or a large corporation.
By offering your sustainability report to a recognised standard, the benefits become significant, with huge appeal to any CFO, HR director, health and safety manager, and beyond. After all, when accompanied by a formal ESG rating – similar to a financial rating, but for sustainability – the Big-4 accountant report a 10 per cent reduction in borrowing and greatly improved access to “green capital” and angel/venture capital investment.
- 10% lower cost of borrowing
- Talent acquisition and retention
- Improved bid approvals
- Better customer acquisition
- 30% higher profit margins
- Lower insurance premiums
Touching on the financials, Accenture notes companies with an ESG rating generate 28% higher revenue, higher net income, and 30% higher profit margins. Moreover, McKinsey and others report that consumers are willing to pay as much as 10% more for brands recognised as sustainable.
If the financial benefits haven’t caught your attention, then there’s the regulatory imperative. The new EU greenwashing regulation affects all of us, including the UK, and enforcement actions by the UK ASA, CMA, and FCA are gathering pace, with even very small businesses being held to account.
Getting started is not difficult. Your ESG report consists of a series of questionnaires on relevant topics, determined by a formal survey called a materiality assessment. With quality data, you’ll then be guided through many questions – anywhere from 200 to 800 – about all key aspects of your business, right down to how you measure your supply chain for ethics and environmental impact.
Finally, there’s the carbon emissions reporting component. The measurements here are critical for producing a valid Net Zero statement, and of course, they’re key to becoming certified as carbon neutral. It’s complex, and for most businesses, it’s impossible to complete accurately using in-house resources. It’s here that the impact of your supply chain makes a huge impact, as your suppliers account for more than 80% of your emissions.