ESG reporting stands for Environmental, Social, and Governance reporting, which is the disclosure of data covering business operations related to the environmental, social, and governance aspects of a business. ESG reporting is a type of corporate disclosure that details the environmental, social, and governance (ESG) promises, efforts, and progress of an organization. ESG reports or sustainability reports are published by companies or organizations to describe their long-term value creation strategies and to meet the demands of investors and other stakeholders.
ESG reporting is important for organizations for many reasons, making it a corporate mainstay across industries and jurisdictions. Compliance is one of the reasons, as there are a growing number of regulations globally requiring organizations to disclose and report on ESG initiatives, sustainability, and governance. ESG reporting is also important for risk management, as it addresses business, sustainability, and social issues. ESG reporting is a way for organizations to make proper disclosure and helps ensure regulatory compliance.
ESG reporting is relevant to publicly traded companies looking to attract and inform investors or any other business looking to attract financing. ESG reporting is encouraged to use reporting which relies on recognized frameworks and standards. ESG metrics that encompass environmental stewardship, social responsibility, and governance provide an additional lens for investors reviewing and evaluating company assets. Investors place greater importance on requiring consistent and mandated standards than finance leaders do as preparers.
