How to Effectively Use Reporting Requirements and Governance to Embed ESG Within Corporate Priorities
Best unorthodox principles for corporate ESG reporting and governance, including building strong relationships and education, from Clean50 Honouree and VP of Sustainability at Aritzia, Rebecca Loyo-Mayo.
I spent much of my early career travelling to the farms and factories where my employers’ products were grown, processed and manufactured. I was ‘at the coal face,’ learning about the realities of market economics first-hand from people relying on the caprices of consumers worldwide. So deep in the weeds, at the time, I could not see how reporting ESG strategy, governance, risk and metrics could support communities and the environment to thrive; the link seemed tangential at best.
This was in the early 2010s and the conversation on ESG reporting was at its absolute infancy in the industry I was working in. There was little to no regulation, reporting or otherwise, and while companies were occasionally reprimanded (predominately in the court of public opinion) for malfeasance, it was the exception, not the rule.
Today, the landscape could not be more different. 9/10 unsolicited emails in my inbox are somehow related to ESG reporting; we all talk about the ESG alphabet soup which seems to be getting thicker every year and your new Head of Finance, Investor Relations or Financial Reporting are almost as conversant in their area as they are in ESG.
Thanks to the quickly evolving ESG reporting requirements we now face, the movement towards corporate level ESG strategies is now irreversible but how can you, as a leader of your organisation, pull some less talked about levers to expedite and future-proof your organisation’s transition to effective ESG integration?
THE 5 LESS ORTHODOX PRINCIPLES I HAVE LEARNED ALONG THE WAY
- Who should really input into your materiality assessment?
As you start to socialise your materiality assessment, you will have established a list of your stakeholders and probably a survey or two. Hopefully you’ve been able to get some expert or consultant eyes on it. My recommendation here is ask ‘critical friends’ or peers outside your industry and geographic region to review your approach to help you think out of the box.
Do you have a trusted civil society partner to lean on or if you’re in retail, do you know someone in extractives or banking? Their voice today may be at the periphery, but you never know when it will be at the centre. My mistake previously was not thinking broadly enough resulting in an echo chamber.
- Build strong relations with your executives and the Board rooms (and not just governance)
Various processes of approval and sign off (formal systems of governance) will automatically come alongside reporting. There is a plethora of reading materials about the importance of formal governance systems that I do not need to regurgitate here. What I have found is that it is just as much these formal systems that get things done as the informal ones.
Let’s be honest, ESG specialists like us deal in day to day doom and gloom; climate collapse, human rights violations and the like. Make yourself relatable and approachable. Make sure the executives and board members you rely on can connect with you on a somewhat personal basis. Tackling entrenched, global and systemic problems is no walk in the park and so you’ll need to have people who not only have to work with you but want to work with you.
- Education, education, education
I increasingly believe that the terminology in our industry is a hinderance. It is not just the acronyms, it is the use of broad terms to describe something specific. In the retail industry, for example, the word ‘transparency’ is used to mean so many things: sometimes specific and sometimes general.
I know that at times I have caused or exacerbated the confusion but a recent approach I have taken is, rather than spending time and energy correcting a misunderstanding, I am spending my time and energy reinforcing and strengthening the re-education. It’s a more positive approach, it feels less like shaming others for a lack of knowledge, and it removes the unhelpful noise from the sphere. Don’t go backwards and correct, go forwards and reinforce.
- Establish a communications framework that works with all stakeholders to bring everyone on the journey
This may sound obvious but for too long I thought that the way to communicate effectively was to communicate entirely different frameworks to different audiences. You can imagine how confusing that got. There are obviously some frameworks like TCFD that for now are more useful to some stakeholders than others.
But alongside these ‘almost’ regulatory frameworks, establish enticing and propelling ESG communication frameworks that can be easily repurposed for clients, employees and investors. Lean on your marketing and creative teams to help you. Again, make this journey approachable and relatable.
- Is full reporting integration really the North Star?
YES. This is less unorthodox and probably blindingly obvious but I feel so very strongly that integrated reporting is where organisations need to be moving towards. Integrated reporting is the best case scenario outcome for us all. All organisations, soon if not now, will be measured equally on their financial performance as on their social and environmental impact.
The companies that can demonstrate their inextricable link for organisational success first show a strategic foresight that will be rewarded down the line.