First time preparing an ESG report?
You may come across these questions when you start planning for the report. Click on each question to find out the answer:
Who is responsible for ESG reporting?
Company secretaries? Investor Relation? Or Marketing? As the KPIs which need to be included in the ESG report may derive from data and information from across departments, it is suggested representatives from different departments should form a reporting team and develop a consensus of understanding of what each of them is responsible for in preparing the report.
When should I start planning for ESG reporting?
It's suggested you should start planning for the 2016 ESG report no later than Q3 of 2016 as you may become busy preparing for the annual report of your company towards the end of the year. Also, it will take time for you to go through stock-taking procedures and audit to see if the policies and procedures included in the report are in place in your company. For 2017's ESG report, you should start defining the scope during around Q3 or Q4 in 2016. In this way, you can get well-prepared to collect necessary data from different departments for the report before the start of 2017's fiscal year.
What needs to be included in the report?
You will need to define the scope of your ESG report, including KPIs and entities covered. It may not be necessary for you to cover all the business segments of your company in the report. For example, if your company has three business segments and the first two generate 80% of your company revenue, you do not need to cover the third segment in the ESG report. Therefore, you need to engage with your internal and external stakeholders to determine which KPIs should be included.What should we do if the data is not available or doesn’t look good?
To write a good ESG report, you need to cover both good and bad news. If you identify any material non-compliance in your company, you are required to disclose that in your report. Best practice would be to state what you are doing to rectify the issue.
Does the ESG report need to be audited?
HKEx states in their publication that this report can be audited, but that it's not mandatory.
Common challenges when preparing an ESG report for the first time:
1 | Defining scope/boundary and reporting principlesIf you unsure whether you should include items which your sub-contractors are responsible for, the key lies in whether your company has direct control over these items. If you are only purchasing the service offered by your sub-contractors and do not have the control over how much resources the sub-contractors have used in the project, it's not necessary for you to include these items in your report . |
2 | Adopting a sustainability vision and business practicesInstead of viewing the preparation of an ESG report as a compliance issue, first-time reporters can shoulder the responsibility for educating other responsible parties such as ESG committee and senior management that they can treat this as an opportunity to identify risks and room for improvement in their existing ESG practices. |
3 | Establishing leadership for sustainability within the organizationTo collect necessary information and data across departments, first time reporters can seek support from senior management in taking the leading role for the preparation of the report. You should also suggest each department having one representative to communicate with the ESG reporting team to facilitate better information collection. |
What makes a good ESG report?
You may need to think about these questions to prepare for creating a good ESG report:
Have the ESG stories been identified and communicated effectively?
Does the report provide explanations on the ESG performance?
Does the report cover both good news and bad news?
Has the information in the report been validated?
Managing your reporting responsibilities is no easy task
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