ESG and climate change reporting expected to be mandatory for businesses within 2 years.
A few months ago, ESG was not really spoken about outside of ASX listed company boardrooms and by governments and even then it was regarded as an obligation by many or a box to tick off to keep various statutory bodies and shareholders appeased. This is changing, not in a wave but a tsunami. It is not going away and will affect how we all do business into the future, with questions from our customers, suppliers, banks and teams about what are we doing in this space.
ESG stands for Environmental, Social and Governance reporting - the non-financial reporting that we are going to have to align with. There are international standards currently being worked on that we will all have a part to play in reaching.
So, what is ESG? The short version…
- Environmental: we have heard bits and pieces about for a long time regarding sustainability and looking after our environment in a better way.
- Social: becoming more prevalent and focuses on what you are doing in your community, with your staff regarding diversity, and ensuring that you are not in breach of any legislation (for example the Modern Slavery Act), and ensuring you are aligned with the Fair Work Act etc.
- Governance: starting to take off in ensuring that your organisation/business structures work for you, the type of business you are today and into the future.
Basically, ESG reporting aims to ensure that businesses are looking at themselves from a holistic point of view and having a more sustainable business both financially and non-financially into the future. You may be surprised by knowing a lot of this information already, or by being able to get access to it. The first step is to get a baseline report of where you are now and plan what it looks like going forward to ensure your business is improving.
This is where we can help. We can help increase your business’ sustainability if you can tell people what you are doing now and what you will be doing in the future too.
ESG is a great opportunity to look deeper into your business, engage with your customers, current staff (and attract new staff) and to prepare for unforeseen circumstances such as what we have just experienced with COVID-19. If you listen to what everyone is saying, there will be more similar events in the future.
All in all, it is a change to differentiate your business and seek new and bigger opportunities. Some predictions say that mandatory climate change reporting (the E in ESG) could be in place within the next two years, making now the best time to look at your ESG standards and impact. Don’t be caught without having started the journey, it is easy to get started and we are here to help guide you.
If you would like to find out more about ESG, and what the future holds for your business contact Amanda Kenafake, CEO and Executive Director.