As individuals, we’re all stakeholders for the companies which drive our economies and influence our lives – whether as investors, customers, suppliers, employees or simply as residents, dependent on the health of our shared planet. Those stakeholders are (rightly) demanding more of companies. They want to understand the purpose and values of the business and its long term ESG (Environmental, Social and Governance) commitments, and to see evidence of the business’s actions to achieve their targets, documented through relevant ESG metrics.
As a result, for companies to succeed in the long-term, they must demonstrate how sustainable their operating models are, how they create long-term value for society, and how they make their company resilient for the future.
In response to the growing stakeholder demand for ESG information, many organisations have already started preparing for future sustainability disclosures by identifying the metrics most material to their sector, strategy and stakeholders, and developing the associated infrastructure to facilitate reporting on those metrics.
As companies report and disclose more ESG information, they should expect an increased focus on the accuracy and reliability of their disclosures and metrics. With mandatory ESG assurance on the way for most large EU companies, management should ensure that they develop appropriate processes and controls, similar to financial reporting, and consider undertaking ESG reporting readiness assessments to ensure they are in a position to comply with the new regulatory obligations.
