The ESG reporting season is starting back up again…or maybe it never ended?
Nevertheless, Rebecca Leonard of Purposeful Projects and I thought it would be helpful to capture the 2020 ESG reporting trends we are seeing before writers and managers are into the reporting weeds of timelines, ‘on brand’ messaging and data collection. There is a lot going on in the ESG reporting space in 2020 so we’ve broken this blog into two parts:
Context, Content and Communication Channels and
Frameworks, Disclosures and Metrics.
We also discussed ESG reporting trends on a recent Boston College Center for Corporate Citizenship webinar with Dave Stangis from 21C Impact. This is part 1 of 2 articles on 2020 ESG Reporting Trends.
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Our corporate responsibility reports are changing. No longer are they a snapshot in past time, printed on recycled paper with PR as the sole intent. We are beginning to move away from that. Today’s reports are improving to become strategic documents that are:
Moving from disclosure to purpose and performance
Looking forward, not backward
Reflecting a changing contextual view
Focusing on social
Using stakeholder-specific communications channels
Moving From Disclosure to Purpose and Performance
The focus of reporting is moving from disclosure to purpose and performance. It’s no longer enough to report what a company is doing to address environment, social and governance (ESG) issues. There is growing expectation that companies will communicate reasons why those decisions were made, and what was accomplished in the effort.
Taking a cue from purpose-based CSR pioneers like Unilever, more companies are moving beyond traditional performance measures to set goals and targets linking back to their fundamental purpose. Others, like Accenture, are committing to higher levels of sustainability performance as signatories to Global Compact LEAD.Among other things, member companies submit an Advanced Communication on Progress (CoP) — an annual sustainability report detailing progress on implementing the Ten Principles UN Global Compact Principles and Global Goals.
Looking Forward, Not Backwards
Performance is most notable where companies are communicating future-facing strategies and clearly articulating goals and progress towards the goals. This is evident in the adoption of the Taskforce for Climate-related Financial Disclosure (TCFD) framework which emphasizes scenario planning for future trends and alignment with the Sustainable Development Goal (SDG) which outline broad, global goals and outcomes connected to specific indicators.
The narrative of reports is also beginning to change, written in the both the past as well as future tense. No longer a simple snapshot of the past year, corporate responsibility reports are becoming strategic document that includes plans for the future with dashboards that show progress towards ESG goals. This is particularly evident when discussing issues such as climate change, resilient business, economic inclusion, and digital governance.
Dow and Intel are particularly good examples of how goals clearly articulate their sustainability strategies and become an organizing tool for their reports. Dow’s 2025 Sustainability Goals focus on their footprint (operations), handprint (products), and blueprint (collaboration) and showcase their multi-decade targets. Intel celebrated their 2020 goal achievements in their last report and shared their Towards 2030: “RISE” Framework and Goals which focused on enabling responsibility, inclusion, and sustainability.
A Changing Contextual View
The pandemic has placed the global and interconnected nature of today’s business environment front and center. The risk of disruption in supply chains and operations has shifted reporting to a more global perspective, both in geographic and philosophic terms.
The Global Reporting Initiative (GRI) published draft revisions of its universal standards for public review. Among other items, these revisions incorporate the UN Guiding Principles on
Human Rights (UNGPs) and include a new definition of materiality that is more directly focused on a company’s impacts outward on the economy, environment, and people. Similarly, the Sustainability Accounting Standards Board (SASB) published proposed changes to its conceptual framework that, among other things, reflect a more global and less US-centric context.
The philosophical shift is also found in important commitments that companies will report in the coming year. For example, the 2020 State of Corporate Citizenship study from the Boston College Center for Corporate Citizenship found that companies continue to demonstrate commitment to fighting climate change despite the U.S. announcement that it would withdraw from the Paris climate agreement.
Focusing on Social
The pandemic and Black Lives Matter movement is driving ESG reports’ data and narratives to be focused on social, without relaxing standards for environment and governance. This is in part due to heightened awareness of company actions in employees, consumers and investors. This includes more transparency about diversity and inclusion and renewed interest in employee benefits and occupational health and safety. Notable examples of external pressures: JUST Capital tracking how employers are treating stakeholders during the COVID crisis, and Truvalue Labs’ free Coronavirus ESG Monitor that captures impact using the Sustainability Accounting Standards Board's (SASB) material issue categories. Companies have been taking stands on social issues, and will be expected to back their positions with data.
Using Stakeholder-Specific Communication Channels
Finally, a one-size-fits-all PDF is still the norm but increasingly digital, video, dedicated websites, and coffee books are being created. A first step many companies are taking is developing an infographic or visual that tells the story of their strategy, program(s), or progress. H&M has a great report to flip through for examples of infographics used throughout the communications tool. AstraZeneca’s Data Summary of their priority areas (access to health, environment, and ethics and transparency) provides a clear overview of their sustainability ambitions and progress.
Determining additional channels for communications will depend on who your primary audiences are and existing corporate communication strategies and tools you can leverage (e.g. intranet launch for employees, video and dedicated websites for consumers, letters to investors or executive summaries for community members, etc.)
Microsoft’s communication plan includes a manageable 40-page pdf report which is easy to review for almost any stakeholder while they also provide a comprehensive microsite for investors and ESG nerds to dive deep into their ESG performance. ArcelorMittal understands that their stakeholders may have a region-specific perspective and therefore provides individual country reports.
As you plan and draft your 2020 corporate responsibility report, consider these context, content and channel trends. Your publication will be more strategic and not be out of date once it’s finally published.
Want to dive deeper into this topic? Then see Et Cetera below...
Explore: Research and Insights
Tactics: Tools and Next Steps
Connect: Organizations Doing Great Work
This is part 1 of 2 articles on 2020 ESG Reporting Trends. Part 2, Frameworks, Disclosures and Metrics will be published next week.
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