Integrated reporting for ESG and how to make it work
We look at how to gather the right data and integrate the impact of ESG work into your financial reporting.
Showing the impact of work in Environmental Social and Corporate Governance (ESG) is becoming as important for big businesses as financial results.
Increasingly, businesses are placing hard numbers showing their investment and the impact of ESG work alongside quarterly and end-of-year results.
Integrated reporting presents an opportunity not only for best practice, but for businesses to tell the whole story behind their work.
But finding a format and the hard data to present ESG work cogently for reporting purposes can be a challenge. So, how should companies approach it?
The value of sustainability
TPXimpact is an AIM-listed technology-enabled services company that recently won an award for presenting its ESG impact alongside its financial numbers in its annual report.
“Stakeholders really want to know the real impact we’re having on our people, the planet and on communities,” Luke Murphy, Head of Investor Relations at TPXimpact, said during a GivingForum event last week.
“We’re an outcomes business, all the way from the top to the bottom. We put profit and purpose in equal balance. So when it comes to reporting we give those two things equal standing,” he said.
“Gone are the days of paying lip service to volunteering and community work. Businesses today need to show real impact and tangible outcomes if they are to grow and succeed.”
From CSR to ESG
While ESG takes in a broad range of performance factors, it operates in a space that has historically been the territory of Corporate Social Responsibility (CSR).
Simply put, CSR is work by businesses intended to have a positive influence on the world, such as charitable giving and volunteering among other things.
By contrast, there are ESG frameworks that companies can adopt, and which can help investors to measure their ethical status and environmental sustainability.
ESG activities involve a broad sweep of measurable activities, from diversity and inclusion to wellbeing.
As a result, frameworks by which companies measure impact in ESG can vary widely. Sometimes these don’t take into account, or conflict with, current or historic CSR activities.
“Many traditional CSR activities contribute to what’s now encompassed in ESG, but they’re not always seen to be contributing to it,” said Isabel Kelly, Founder and Principal Consultant of Profit with Purpose.
“We’ve seen a rapid shift in interest into the kind of work that we’ve been doing in CSR, but towards an ESG agenda.
“This is now a board-level interest. It’s no longer ‘a nice to have’ but is essential.”
Because the same requirements to report on ESG haven’t historically applied to CSR, the latter can sometimes be light on hard data to support its impact. A move towards integrated reporting provides an opportunity to show real value in both CSR and ESG work. But it’s important to capture the right data.
“It’s time for CSR to step up with some really hardcore metrics to show how it delivers,” Kelly said.
“Rather than storytelling, we need the harder numbers for reporting on ESG and how it ties into company priorities and bigger objectives, including commercial objectives.”
The tools for integrated reporting
Integrating CSR into an ESG programme and accurately reporting on its impact and value to your company, investors and other stakeholders can be a challenge.
Best practice is no longer about reporting the metrics of how many volunteer hours were given or how much money was raised. It’s about showing the positive impact of that work and how its impact and the intentions driving it align with company values.
Excellent data capturing technology is the key to good reporting on ESG and CSR, and to presenting those numbers integratively alongside business profits. It can be difficult for auditors to measure ESG impact in a way that is satisfying and comparable unless you have the right data and due diligence behind it.
“It’s important to make sure that the data that’s captured is auditable and meets a minimum standard,” says Ejaz Rashid, CEO and Founder of GivingForce.
“With the data GivingForce gives you access to, companies can see clearly where the information has come from and who has touched it, making it easier for auditors to verify it and check whether it’s correct. Reporting requirements are constantly evolving. There’s also a significant increase in demand for ESG data from all parts of the business.
At GivingForce, we address that challenge head on by making sure it is possible for customers to slice their data however they need it. The numbers can be reviewed regularly and our compliance team ensures robust due diligence is completed on the charities and nonprofits.
This means our business customers can be sure they are compliant in their giving programmes and that the good work they’re doing can be properly measured.”
Further reading
Read more about Impact Reporting with GivingForce.
Continue reading in our Blog or Learning Hub
Stay up to date with our news and updates by subscribing to our Weekly Newsletter
All rights are reserved by GivingForce Ltd. Content may not be reproduced, downloaded, disseminated, published, or transferred in any form or by any means, except with the prior written permission of GivingForce Ltd.