ESG reporting has become significant in recent years due to the growing issues associated with environmental changes, social inequality, and corporate finance.
What is included in ESG reporting in the UK?
In the UK, ESG reporting varies depending on the type and size of the business, although large businesses are expected to report ESG. One of the reasons as to why it is now expected is because of the goal of reaching Net Zero by 2050. By large businesses disclosing their ESG performance, investors get full transparency in their operations, discovering their true commitment to sustainability. Large businesses produce more greenhouse gases compared to SMEs; this is why it is more important for them to report ESG, however, it is recommended that SMEs report ESG to maintain full transparency in their operations.
How is ESG reporting impacting SMEs?
SMEs are facing pressure to report their ESG, as larger businesses are reporting theirs. A way in which SMEs can be recognised for their social and environmental efforts is by getting a B Corp certification or by implementing the Sustainable Development Goals into their operations. Some SMEs are customising their own ESG framework to their size, industry, and objectives, this does in fact avoid the expenses of adopting an existing ESG framework. By initiating these efforts now, SMEs are setting themselves up for success, as sustainable practices result in business success.
To ensure effective ESG reporting, businesses should only adhere to the best practices. This can include only focusing on the most relevant ESG issues that have the greatest impact on your stakeholders and business and providing clear and transparent information regarding your ESG performance. Additionally, weighing up the pros and cons of certain procedures, with tools such as a SWOT analysis is crucial. By successfully implementing and reporting on ESG, businesses can secure valuable investments, as well as contribute to a sustainable and profitable future.
