First, it’s important to understand what ESG reporting is and why companies do it. ESG stands for Environmental, Social, and Governance reporting, and these reports demonstrate a company’s impacts in those particular areas:
● Environmental: Analyzes a company’s impact on carbon emissions, climate change, deforestation, biodiversity, waste management, and more.
● Social: This looks at the company’s impact on human rights, customer satisfaction, gender and diversity, data protection, privacy, labor standards, and more.
● Governance: Analyzes the businesses impact on board composition, bribery, thievery, political contributions, whistleblower programs, and others.
For stakeholders, ESG reporting is crucial when determining the quality and value of a company compared to one another. These reports force global brands to be more transparent and open with their standards, as this is the information that draws in (or turns off) buyers and investors. Not only that, but having this information be readily available also entices brands to shoot for higher standards, always wanting to beat out their competitors.
Companies undergo ESG reporting to ensure they’re following proper standards and to show outsiders how reputable the brand and its values are. These tests also help measure how risky a company may be, as it can find faults, opportunities for growth, and other areas of improvement.
Essentially, an ESG report is going to have all the answers you need to the questions you have about a particular company’s socioeconomic and environmental impacts.