Investors and large business clients routinely ask their portfolio and supply chain partners to provide ESG metrics. They do this so that they can understand your business from a risk and opportunity perspective. They want to know where you might cause actual environmental or social harm (and thus potentially brand harm for them), and where you might be doing something positive that they can capitalise on.
Whilst unfortunately there are no standard metrics that they ask for, there are common themes that they cover:
The key ESG impacts you have, and that you’re working to improve. These are the metrics that align with your ESG strategy (if you have one). If you haven’t got one yet, your focus here should be on carbon and diversity reporting. These two ESG issues are industry agnostic and the most common focus areas for investors and large business clients.
ESG success stories. Many times we work with companies that have achieved a significant ESG goal, such as sourcing all their paper/timber from sustainable (FSC/PEFC/recycled) sources, or 100% renewable energy. This information might be profiled on first achievement but is then often lost. These metrics should continue to be reported year-on-year otherwise your stakeholders may not know about it.
Negative ESG impacts that you don’t have, and that you never had. Investors and big business clients work with companies from a broad range of industries and understandably they don’t know your business like you. It might seem obvious to you that your company doesn’t produce any hazardous waste but your stakeholders won’t know that unless you tell them. Consider what ESG harms other sectors (e.g. manufacturing) might cause, and make sure you showcase metrics that demonstrate that you aren’t doing the same.
In our experience, most companies focus their ESG data collection on their strategy priorities only. This is selling yourselves short and we strongly advocate that companies spend time developing some of the latter two types of metric because they not only add value to your stakeholders but take minimal effort to collate.
In terms of reporting these metrics, you can keep them internal, including them in tenders/ESG questionnaires as appropriate, or to maximise their value, publish them externally. This doesn’t have to be in a Sustainability Report - a downloadable PDF or Excel sheet is just as good, if not better, as it allows for routine additions to be made as new data requests come in. By publishing this way the information will be accessible to a far larger number of interested stakeholders and you will also have a central repository of information for internal use.
An added advantage of externally publishing metrics is that you also have the opportunity to include best practice reporting framework references (e.g. those of the Global Reporting Initiative or the Sustainable Accounting Standards Board) which makes cross-referencing information easier for your stakeholders and more importantly, sends an indirect message to the outside world that you understand important ESG standards.
To get started on a KPI report download our free ‘ESG KPI quick-wins’ tool. This simple spreadsheet has 10 metrics with their GRI references, and you can likely populate it all in less than 10 minutes. Simply add any other ready-to-hand ESG metrics from your business and publish this on your website for an instant ESG credentials boost. Keep adding to this over time and you’ll just keep looking better and better.
Authored by Caroline Johnstone.
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