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ESG Reporting Landscape: A Complete Overview

Enhance your sustainability efforts and meet ESG reporting standards effectively. Learn the steps to achieve accurate and compliant ESG reporting.
by 
Chiara Meacci
December 20, 2023
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Did you know over 90% of S&P 500 companies are already jumping on the ESG reporting train? Now, even small to mid-sized companies are getting in on the trend. But here's the catch: collecting and processing reliable ESG data is no walk in the park.

With so many reporting standards and data management methods floating around, obtaining accurate and trustworthy ESG data is difficult. And to make things more challenging, the landscape keeps evolving with new initiatives popping up left and right.

But fear not! We've got you covered. In this article, we'll take you on a deep dive into the world of ESG reporting. We'll explore its current state, shed light on the dangers of inaccurate reporting, and introduce you to ESG Flo: the solution you need to ensure objective, accurate, and compliant ESG reporting.

What is the current state of ESG reporting?

The number of ESG reporting provisions issued by governmental bodies has skyrocketed, experiencing a 74% increase over the past four years – and there is more to come!

The European Parliament recently gave the thumbs up to the Corporate Sustainability Due Diligence Directive (CSDDD) to establish a framework for companies' due diligence obligations regarding human rights, environmental protection, and social issues throughout their supply chains.

The SEC also is stepping up its game by introducing fresh environmental disclosure regulations for publicly traded companies that oblige them to disclose the risks associated with climate-related impacts on their financial outlooks and business models. They are not alone, however, with other governing bodies and organizations actively shaping the ESG reporting landscape.

German Supply Chain Due Diligence Act (SCDDA)

The Supply Chain Due Diligence Act, or as the Germans call it, Lieferkettengesetz, passed in March 2021 to promote responsible corporate behavior in global supply chains. It applies to big companies with over 3,000 employees, including foreign companies operating in Germany. The act includes provisions for civil liability and aims to address supply chain issues.

Is this going to affect your business? Prepare for the impact on your business. For more information, visit our website.

Corporate Sustainability Reporting Directive (CSRD)

The Corporate Sustainability Reporting Directive (CSRD) is a proposed update to the European Union's non-financial reporting directive. The goal? Boost transparency and accountability in ESG reporting. It will require big companies to disclose detailed and standardized information on their sustainability performance, including carbon footprints, social impact, diversity, and inclusion policies if approved. The CSRD has not officially started as it is still undergoing the legislative process, but it is expected to take effect sometime this year.

SEC Climate Disclosure Rule

The SEC Climate Disclosure Rule is a proposed regulation by the SEC to bring more transparency and help investors make informed decisions about their money. When this rule becomes official, public companies must reveal how climate change could impact their business – everything from weather patterns, rising sea levels, and government regulations. The rule is currently in a comment period and will come into effect later this year after incorporating feedback from stakeholders.

These regulations are piling pressure on companies to ensure the accuracy of their ESG data. It can be a lot to keep up with, but in the past few weeks, we have had some good news with the IFRS Foundation's International Sustainability Standards Board (ISSB) announcing its new global sustainability and climate disclosure standards.

This is a huge deal because it will form the basis for emerging sustainability reporting requirements by regulators worldwide. It's a major step towards integrating sustainability reporting into the broader financial reporting process.

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The final International Sustainability Standards Board (ISSB) standards on sustainability (S1) and climate (S2) have now been released (D. Carlin)

What are the risks and consequences of inaccurate ESG reporting?

Inaccurate ESG reporting comes with many risks and consequences you should be aware of.

First, here's a term you need to know: "accidental greenwashing", which is when companies unknowingly provide misleading sustainability information due to incorrect or incomplete data. According to a survey by Boston Consulting Group, businesses have an average error rate of 30% to 40% in their emissions measurements. So, whether intentional or not, reporting inaccurate ESG data puts your reputation and bottom line at serious risk.

Regulators in the U.S. and Europe have been cracking down on greenwashing practices, and they mean business. Just last year, the SEC slapped fines on BNY Mellon Corp. and Goldman Sachs Group for ESG misstatements and policy failures. It was a clear message that greenwashing claims wouldn't be taken lightly.

Addressing these challenges requires a unique solution such as ESG Flo: the ultimate tool for achieving objective and reliable ESG data reporting, safeguarding your reputation, and keeping legal risks at bay.

How does ESG Flo solve all of these problems?

So, what makes ESG Flo so special? Let me break it down for you:

  1. AI data ingestion: ESG Flo takes away the hassle of manual work by automating data ingestion. No more errors from manual data entry. AI streamlines the entire process, ensuring greater accuracy in the process.
  2. Automated error and anomaly flagging: ESG Flo uses intelligent algorithms to detect anomalies or errors in reported consumption or emission values. It raises flags for further review when deviations from historical data occur. This proactive approach ensures accurate data and identifies discrepancies.
  3. Transparent emission factors: ESG Flo provides clear visibility and traceability of emission factors used to convert usage data into emissions meaning stakeholders can easily understand the calculation process, ensuring reliability and standardization.
  4. Full traceability from source to emissions: ESG Flo tracks data from source documents to calculated emissions, providing an audit trail, and enhancing data integrity.

Ultimately, we empower organizations to report ESG data that is objective, accurate, and relevant. It sets the bar high for transparency and compliance, helping you meet the highest standards with confidence.

Ready to ensure precise, transparent, and compliant ESG reporting for your organization? Book a demo call to see how ESG Flo can transform your ESG reporting process.

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