By Julia Wilson
“There are too many external reporting entities out there.”
It’s a common refrain heard among sustainability and CSR professionals these days. Whether you’re looking at the external raters and rankers that seek to stack companies up against their peers, or the standards setters like GRI and SASB, we can all agree that there’s an abundance of organizations in the environmental, social, governance (ESG) reporting game. I, too, have shared in this sentiment, whether speaking among friends at a conference or as part of industry panel discussions; everyday, it seems, a new organization or framework emerges, asking on behalf of clients, investors, or even society more broadly, for information about your company’s ESG performance and strategy. Managing lengthy questionnaires or responding to these requests on tight deadlines can feel overwhelming, particularly if the effort and resources needed to participate outweighs the value.
In that vein, I’d like to share my perspective on the current ESG reporting landscape. It might seem counterintuitive, but there is value in this variety–at least for now.
Sure, an abundance of reporting entities means that there’s plenty of excess out there. However, at the heart of external reporting lies the question: what does this diversity in ESG reporting entities afford us today? For starters, there’s value in recognizing the patterns that emerge. The ability to spot trends across multiple frameworks or standards is one way to validate your efforts and reconfirm the strategic areas of greatest importance to your key stakeholder groups. Conducting a materiality assessment, understanding your operations and stakeholders, and connecting your business strategy with your top ESG focus areas are all key to developing a coherent strategy. ESG reporting frameworks and standards can provide external validation that your efforts are focused in the right direction.
Reporting variety also means that there are some great options available when it comes to choosing the right mix of whatever ESG standards, frameworks, questionnaires and surveys makes the most sense for your company. There’s no question that each and every survey is not applicable for all companies or across all industries. Thus the right reporting selections for your company should support a cohesive mix of well thought-out indicators across all ESG areas most relevant for your business and to your stakeholders.
At Nielsen, we’ve taken advantage of this variety to craft our own internally-driven ESG framework, linking our ESG strategy and external reporting efforts as part of a cohesive cycle focused on continuous improvement. Focus and consolidation are at the core of this effort. By pulling in inputs from various reporting entities–well over a thousand, in our case–we’ve created our own consolidated internal “ESG database” of the metrics that matter most to Nielsen, cutting out the excess while recognizing the topics that bubble to the top. This is what we share with our internal subject matter experts as part of our external reporting efforts. But, more importantly, it serves as a key part of our ESG guidebook in developing our strategy and measuring our progress over time. It’s also useful as new trends emerge and certain ESG areas pick up steam over others.
No one reporting entity is perfect. As the world and environment around us rapidly change, the ESG reporting space will have to continue to evolve along with it. So how do we continue to personalize ESG reporting for our companies within a seemingly busy space? Think about what your company isn’t asked enough. Consider baking that into your external reporting strategy in a way that allows you to explain its relevance and own the outcomes.
On the flip side, give yourself permission to focus less on the areas that are immaterial to your business. This in fact might be an opportunity to further clarify your business model. Don’t ignore them–simply explain why they are irrelevant. Misplaced emphasis or inappropriate questions can be a blessing, not a curse; in this case, it’s a helpful sign that perhaps some clarification about the nature of your business would be useful. Given that most analysts, for example, only have a few minutes to review materials for each of the many companies they cover, providing additional clarity should help them–and your other stakeholder groups–better understand your business and what the future might hold.
In the world of sustainability reporting, there’s an ongoing push and pull; not only do we respond to questionnaire or survey requests on behalf of our stakeholders, but we also have the opportunity to shape our own public narratives. For Nielsen, this means sharing our strategic approach–and where we are on our long-term journey–through proactive measures, like our Nielsen Global Responsibility Report and our non-financial materiality assessments.
While it’s easy to lament the variety of reporting entities in the marketplace, harness the value in this variety to make the most of ESG reporting for your company.
Julia Wilson is Director of Global Responsibility & Sustainability at Nielsen. She is also a member of the Global Reporting Initiative (GRI) Global Sustainability Standards Board (GSSB).