Going from Good to Great
Ways to make your sustainability report business-critical
There has been a steady increase in the volume of sustainability reporting over the recent years, with organizations around the globe investing significant time and effort in monitoring and disclosing their sustainability performance, or ESG — environmental, social and governance — performance, usually in a sustainability report that is separate from a financial statement. Yet, our discussions with hundreds of stakeholders on this subject found a strong counter-current from various categories of stakeholders that question the value of the ESG information as a basis for business and investment decisions.
The questions raised by these stakeholders are not trivial. They may reveal a perceived credibility deficit for ESG reporting both internally and externally for an organization. The key is to make ESG information more decision-relevant, including those decisions related to tracking, monitoring, performance evaluation and incentives.
To make sustainability reporting business-critical, companies should consider adopting a more robust methodology for determining ESG materiality. In fact, we believe that the most effective way to successfully evaluate the materiality of ESG issues and to truly derive a business value from sustainability reporting is to integrate them into the company’s overall valuation model which drives its valuation..
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