ESG Reporting and Communication PDF

ESG reporting and communication. EE6000 Introduction to ESG Prepared by: Mahmood Hammad What is ESG Reporting? ESG reporting has become essential, not only for investors seeking performance indicators, but also for companies trying to increase operational efficiency and decrease exposure...

ESG reporting and communication. EE6000 Introduction to ESG Prepared by: Mahmood Hammad What is ESG Reporting? ESG reporting has become essential, not only for investors seeking performance indicators, but also for companies trying to increase operational efficiency and decrease exposure to risks. ESG factors cover a wide spectrum of issues that were traditionally not part of financial analysis yet may have financial relevance. This might include how corporations respond to climate change, how good they are with water management, how effective their health and safety systems are in preventing accidents, how they manage their supply chains, how they treat their workers and whether they create a corporate culture that builds trust and fosters innovation. What is ESG Reporting? ESG Reporting might include how corporations respond to climate change, how good they are with water management, how effective their health and safety systems are in preventing accidents, how they manage their supply chains, how they treat their workers and whether they create a corporate culture that builds trust and fosters innovation. ESG describes three categories of factors that may affect an organization’s performance, and therefore, its value. ESG criteria are best suited to effectively assess an organization’s resilience, adaptability, long-term sustainability and capacity for growth. Examples of ESG criteria  Identifying the themes and defining material issues An effective report covers ESG considerations that are relevant to the business strategy and illustrates the link to both long-term and short-term value creation. Companies can also use a variety of national and international resources to develop an initial list of ESG themes, whether these themes are generic or sector specific. For example, a company can use the UN Global Compact’s 10 Principles, SDGs, SASB, and the Global Reporting Initiative (GRI) sector disclosures for reporting on environmental, labour, human rights and governance issues. Identifying and engaging stakeholders Understanding the needs of the stakeholders is key in the definition of the materiality matrix which will serve as the basis for the ESG report. The term “stakeholders” encompasses customers, employees, suppliers, shareholders, affected communities and surrounding ecosystems, all of which are affected by a company’s sustainability efforts. Identifying the major stakeholders allows a company to define its most material issues. Aligning report ESG reporting allows companies to gain a better with corporate understanding of the links between strategic goals, business models, risks, opportunities, operational strategy and indicators and financial performance. Bahrain Vision Identifying reporting and performance gaps enables the company to work to fulfil them, thus aligning itself with 2030 corporate strategy and with Bahrain Vision 2030, subsequently accelerating it. Referring to regional and international sector-specific standards Adopting international sector specific standards and certifications, such as ISO standards, allows companies to gain accountability and credibility. Evaluating relevant performance indicators Once material issues have been identified, a company can disclose specific performance indicators to demonstrate progress. Such indicators can also be adopted from leading reporting agencies and initiatives such as the Global Rating Initiatives (GRI), The Sustainability Accounting Standards Board (SASB) and Climate Disclosures Standards Board (CDSB). Reporting Process Collecting quantitative data, studying trends and setting targets Quantitative data in ESG reporting within a company serves as a vital tool for objectively measuring performance across environmental, social, and governance criteria, enhancing transparency and accountability, facilitating comparative analysis, managing risks, informing investor decision-making, and bolstering reputation. It provides a concrete framework for assessing sustainability goals, attracting socially responsible investors, and improving brand perception through tangible evidence of responsible business practices. Annual reports: Annual reports are intended to give shareholders and other stakeholder group information about the company's activities and financial performance. Some companies integrate ESG issues into their annual reports, aiming to provide investors with ESG disclosure at the same time as wider information about the company. Stand-alone sustainability or ESG reports: Stand-alone sustainability or ESG (Environmental, Social, and Governance) reports for a company offer concise yet comprehensive snapshots of its sustainability initiatives, performance, and impact. These reports typically detail the company's efforts to address environmental challenges, promote social responsibility, and uphold governance standards. They often include key quantitative data, qualitative insights, and narratives to communicate progress towards sustainability goals, demonstrate transparency, engage stakeholders, and showcase the company's commitment to long-term sustainable practices. (ESG Reports are available on Moodle page week 10) REPORTING ON ESG KEY PERFORMANCE INDICATORS (KPI) (According to Bahrain Bourse ESG Reporting Guide) (Available on Moodle Page Week 10) Students Tasks: Students are asked to read ALBA ESG report to have an idea about the topics covered within ESG reporting process. Students are asked to research and study Global Reporting Initiative (GRI) standards related to each ESG reporting KPI stated previously.