In my five years working in corporate reporting, there's been one theme that keeps coming up - with every business, across every market. Environmental, Social and Governance issues are top of the agenda - and the clamour around them is only getting louder.
In fact, it is deafening. Rightly so, as we have reached the tipping point for our planet, and the latest IPCC report says it all - we are running out of time with a 'brief and rapidly closing window to secure a liveable future'.
Reporting is a fundamental mechanism in helping to support a more sustainable future, but as it stands, many companies are having to spend too much time and money grappling with reporting and divergent information requests from various stakeholders. There's lots of fantastic stuff happening in the ESG reporting world - most notably with the formation of the ISSB, but convergence is some time off, and with different geographical approaches (EU vs UK vs US), different fundamental beliefs in what reporting should cover (single vs double materiality), and different levels of detail required from audiences, it looks like it's going to get harder before it gets easier. So where do businesses start?
These ESG themes are not new. So now, as always, it's best to start with working out what areas are most material for the long-term survival and performance of the company and go from there. I suggest starting with (or re-visiting) the following questions to avoid losing clarity of thought and message:
What's important for our business, what do our investors and other stakeholders really need to know?
What regulation do we have to comply with now and what's coming up?
What frameworks are voluntary, but could help us to tell our story better?
Two words of caution - Length and Trust
Many businesses are grappling with the issue around length of report. Additional reporting adds complexity to communications documents and can shroud important messages, which means key points can get lost. It's now more important than ever to remember the concept of materiality for the strategic report, and also that a single document cannot - and should not - be suitable for all audiences. Bear in mind that in this case, less can really be more, and companies should use clear signposts to supporting detail for users who wish to dig in more via a supplemental report, datasheet or section of the website.
It's now commonplace for firms to have Net Zero plans. It's also common for companies to have interim targets for the near future. What's not clear is what happens after the near term targets. Concepts such as Carbon Capture and Storage are unproven at scale, and many Net Zero plans rely heavily on this. Directors have an obligation to make sure that the annual report gives a true and fair view, it's incredibly important to state the dependence on, and limitations of these solutions. It would also be helpful to explain how they are helping to accelerate their widespread adoption and success, rather than hoping that they will simply appear (and that investors won't ask too many questions before then). In such a complex environment, transparency and honesty are essential.
"Whilst it's a pretty confusing time to be involved in the reporting world, the silver lining is that these challenges mean progress. The world is acting, and reporting is a crucial way to help hold companies to account on their promises. This is a Good Thing."
— Justine Dixon, Head of Corporate Reporting, Superunion London
With so many deep technical specialists in areas of E and S, it can often feel overwhelming if you're new to this or if you don't have the time or resources to become an expert. But bear in mind that so many are still learning (myself included!) and will continue to do so for a very long time. This is a journey - some are far ahead, some are just started, but what matters is that everyone is moving in the right direction.
First published in Communicate Magazine.