ESG Reports. The key aspects, why they are important and how they are prepared

ESG (Environmental, Social, and Governance) reporting is a tool that provides comprehensive information about a company’s impact on the environment, society and the way it is governed. Here we look at what ESG reporting is, why it is essential and how companies should prepare it.

What are ESG reports?

ESG reports are a document that contains information about how a company manages its environmental, social and governance aspects. They provide specific data and metrics showing a company’s commitment to sustainability and social responsibility.

Why are ESG reports important?

Investor awareness: ESG reports are key for investors as they provide important information about the risks and returns of investing in a company. This allows investors to make informed decisions.

Consumer transparency: for consumers, ESG reports are a tool to make informed decisions when choosing products and services. They can support companies that adhere to high sustainability standards.

Public engagement: ESG reports are a means for the public to understand how a company impacts the environment and social development. They show a company’s commitment to the communities affected.

Who prepares the ESG reports?

ESG reports can be prepared internally by the company or with the help of external consultants and specialist firms that deal with non-financial reporting. ESG reports are the result of an internal analysis and assessment of its impact on the environment, society and governance. The company must analyze its operations, policies and practices to determine what improvements can be made.

How are ESG reports prepared?

Identification of key aspects: the company should identify the key aspects of its operations that have an impact on ESG areas. This includes environmental issues, social issues and governance aspects.

Collect data and metrics: The company must collect the necessary data and metrics to show its impact on ESG areas. This may include data on GHG emissions, social programs and governance initiatives.

Analysis and evaluation: the information obtained must be analysed and evaluated. The company should draw conclusions and identify areas where progress can be made.

Report preparation: Once the analysis and evaluation have been done, the company should prepare an ESG report that presents the results of the process. ESG reports are a critical tool for transparency and accountability in business. They provide important information on how companies manage their environmental, social and governance aspects. Stakeholders can use these types of reports to make informed decisions, such as investments or purchases. From 2024, certain companies in the EU are required to provide ESG reports in line with the European Sustainability Reporting Standards (ESRS), making them an integral part of any company’s business strategy.

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