An opportunity for companies to build greater trust
ESG (Environmental, Social and Governance) reporting is the disclosure of performance in relation to material ESG risks and opportunities, both qualitatively and quantitatively, to explain how these material topics inform a company's strategy and overall performance.
However, while inroads have been made, there’s still room to improve as companies struggle to keep up with a growing demand for investor-grade ESG reports. There’s a significant opportunity for executives and boards to improve reporting for the non-financial metrics that ESG covers, closing the gaps, and providing greater confidence with stakeholders in delivering on strategy and ESG commitments.
ESG should be regarded as an opportunity, not a risk; it’s a means for executives and boards to build greater trust with employees, shareholders and communities in which they operate.
As ESG reporting evolves and companies disclose more relating to these issues, organisational ESG metrics will come under increasing scrutiny. Making sure these metrics are prepared with the appropriate rigor for investor use, and can hold up to regulatory scrutiny, will be crucial to future success and growth.
of the ASX 200 don't sufficiently report on ESG performance
of the ASX200 identify at least 5 material ESG issues for their business
of the ASX200 have at least one metric for all of the material issues identified
Less than a 1/4
of the ASX200 link ESG to their core strategy
Watch John O'Donoghue and Adam Cunningham, two of our ESG & Climate Risk experts, talk about the renewed, intense focus on the potential impact ESG has on financial reporting.
A singular focus on creating shareholder value is giving way to a broader focus on stakeholder value. ESG initiatives can provide reputational and competitive advantages, unlock new opportunities, mitigate risks and increase long term market value.
A range of non-financial information is increasingly included in investor, customer, employee and other stakeholder communications creating a new challenge of consistent, high quality disclosure. We help businesses establish marketplace trust and credibility through rigorous, transparent reporting and assurance programs, and through communications strategies that engage stakeholders.
The needs of stakeholders extend beyond financial reporting into broader corporate reporting. To truly meet this need, clear reporting of integration of ESG into core strategy is required to demonstrate to stakeholders the non-financial aspects that are also critical to the company’s success.
Identify the ESG topics and metrics that are material to achieving the company’s core strategy and to creating long-term value to help prioritise reporting efforts.
Committing to ESG means moving away from an ‘add-on’ attitude towards ESG strategies, and moving towards an integrated approach where ESG is embedded in core strategy.
Once a strategy is set, a company must be prepared for stakeholders to hold them to account. This means setting specific and measurable targets against KPIs for material ESG aspects, and driving desired behaviours by embedding performance against these targets in executive and management performance programs.
ESG reporting needs to include accurate, comparable and reliable information to facilitate decision-making by stakeholders.
Sustainability Risk and Reporting, PwC Australia
Tel: +61 2 8266 1330
ESG Reporting, Assurance ESG Lead, PwC Australia
Tel: +61 439 988 021
ESG Trust and Risk, PwC Australia
Tel: +61 3 8603 2759
ESG Director, PwC Australia
Tel: +61 2 8266 0744