ESG Sustainability Reporting: What It Is, and Why We Do It
Implementing sustainable and value-driving practices is no longer something that businesses simply talk about. Disclosing how these practices impact the world around them has become imperative to today’s stakeholders.
Businesses must now rely on Environmental, Social, and Governance or ESG sustainability reporting to explain their impact — but what is this, exactly?
What is ESG sustainability reporting?
The first thing to understand is that “sustainability” is an overarching concept that businesses aspire to achieve. ESG reports provide clear-cut explanations of how a business integrates sustainability into its DNA by providing its environmental, social, and corporate governance information.
Having these reports improves the transparency and accountability of businesses as they share both their current and future ESG initiatives. They are an effective way to show that a business is meeting its goal of sustainability.
In other words, sustainability is the goal, while ESG reports show the efforts taken to reach that goal.
Stakeholders use this report to examine how the organization adds value to the economy and society, and helps them better assess its long-term financial performance and risk.
What is the difference between ESG and CSR?
The difference is in what the ESG and CSR reports disclose. ESG reports, which show assessable outcomes of a company’s efforts thus far, and what it plans to do next, are used by stakeholders to screen potential investments.
CSR reports, on the other hand, cover a company’s social commitment initiatives and their cultural influence. These describe how it plans to improve the livelihood and environment for both its internal and external stakeholders.
The two have some overlap, as they both explore social and environmental concerns, and what an organization does to address them. They also share the goal of improving profitability and favor while still safeguarding the environment and communities around them. Both therefore are strategic considerations for businesses and stakeholders.
What do ESG reports include?
ESG reports provide qualitative and quantitative results for three sectors.
The first is environmental, i.e.,what an organization is doing to help the environment. This can cover:
- Efforts to combat climate change
- What are being done to reduce its carbon emissions and material waste
- How it helps preserve biodiversity, improve air and water quality, combat deforestation, etc.
- How it is using its resources and managing waste
The second is social, which considers what the organization is doing to improve the lives of people around them:
- How it nurtures people in the workplace
- What gender, BIPOC, and LGBTQ+ inclusivity initiatives it has implemented
- Its data protection and privacy policies
- Its involvement in both employee and community engagement
- Any issues concerning human rights and labor standards
The third is governance, which covers what the organization is doing to ensure its business is run fairly and corruption is avoided. This includes:
- Its internal controls
- Any policies and procedures that govern leadership, board composition, executive compensation, auditing, and shareholder rights
- Any measures to address corruption, bribery, lobbying, political contributions, and whistleblowing
What is an ESG score or rating?
ESG reports are not meant only to be read but are also graded by other organizations. Several third-party organizations—notable ones include Bloomberg ESG Data Services and Sustainalytics ESG Risk Rating—assign scores based on a set of ESG metrics. These metrics indicate an organization’s ability to meet its commitments and measure its performance for the last reporting period.
The final ratings show stakeholders how attractive an organization is in terms of profitability and sustainability.
Why do we provide ESG sustainability reports?
ESG reporting has become a key priority for many organizations as it provides the public not only with measurable results of ESG efforts but also with targets for future development.
This information is extremely valuable for today’s environmentally-conscious generation of new investors and stakeholders who demand that businesses have a purpose beyond just generating profit.
With this ideological shift, businesses now have to make a profit while supporting society and the environment as a whole.
Through ESG reports, stakeholders can assess and identify businesses that align their efforts and use their resources to create projects of value. These reports also help them avoid businesses with a high risk of environmental destruction, exploitation, and corruption.
How we do ESG sustainability reporting at Aboitiz Sustainability
ESG sustainability reporting is crucial to businesses nowadays. This is why we established Aboitiz Sustainability and uphold our ESG practices at the core of how we do business.
Our vision, as the stalwart supporter of sustainability, is to embed good governance, social responsibility, and ethical environmental management as the guiding principles within each arm of the Aboitiz Group.
We know we do well by doing good, and we strive to make the right long-term decisions that not only meet the ever-evolving interests of our people — but also the environment and communities around us.
Thus, our ESG reports serve as both an assessment of our efforts, as well as a framework for our future endeavors. Through them, we set targets to continuously innovate and improve our performance each year. Our goal is to extend the scope of the value we create, to benefit our stakeholders, and our home.
Our ESG reporting also allows us to be fully transparent to our stakeholders and lay out the tangible results of our initiatives. As we continue on our journey in building a safer, cleaner, and fair world for all, we aspire to achieve excellence in every report.
ESG sustainability reporting is the new global standard for businesses as it allows them to communicate their performance on the environmental, social, and governance front. This report is used by stakeholders to seek organizations that are dedicated to strong ESG impacts.
Every year, the Aboitiz Sustainability efforts are documented for the public’s consumption in our Annual and Sustainability Report, which is available for download on our website.