ESG reporting: Pros and cons of sustainability reports?
Environmental, social and governance information has become more commonplace in recent years, with the rise being attributed to increased societal expectations of both companies and investors. Here, Will Pomroy discusses whether sustainability reports are helpful for business.
Companies are increasingly asked for environmental, social and governance (ESG) information by a number of stakeholders. The surveys abound, the external ratings providers proliferate and regulatory requirements are on the increase. On the company side, the costs of collecting, compiling and communicating this information are growing and, understandably, many question whether their reports are read and whether the information adds value.
These are fair questions. In the simplest terms, there is absolutely value in a company communicating its sustainability performance, not least because if they don’t tell their story, someone else will tell it for them. Additionally, the direction of regulation is clear. The non-financial reporting requirements of companies in Europe have grown substantially in recent years and I have no doubt there is more road to travel. Like it or not, sustainability reporting is here to stay, and companies that do it well could, in time, be rewarded with an improved rating from the market.