7 ESG report examples for finance teams

Prophix ImageProphix Feb 6, 2024, 5:00:00 AM

ESG is more than a buzzword. It’s changing the way businesses plan and report on their environmental, social, and governance impacts. And there is increasing demand for ESG reporting across businesses and industries – for good reason.

But there is a lot to understand before you jump into ESG reporting, like the frameworks and standards, how to set ESG objectives, how to write (and what to include in) an ESG report, and reviewing examples of ESG reports from leading companies.

That’s what we’ll dive into in this article. Read on to learn everything you need to know about ESG reporting.

In this article, we’ll cover:

What is ESG?

ESG, short for Environmental, Social, and Governance, is a set of standards used to evaluate a company’s environmental and social impact. Internal or external stakeholders can do ESG evaluations. It’s common for the CFO to own ESG reporting within an organization.

What is an ESG score?

ESG scores measure a company’s sustainability and ethical performance. ESG scores are used to address how a company handles environmental, social, and corporate governance risks and concerns within its operations.

An ESG scores is comprised of three categories:

  1. Environmental issues like renewable energy, pollution, energy efficiency, and carbon footprint.
  2. Social issues like human rights, labor practices, and diversity, equity, and inclusion.
  3. Governance issues like shareholder rights, risk management, executive compensation, and board diversity and structure.
ESG scores

Who assigns ESG scores?

ESG scores are assigned by the company and are based on factors like long-term vision, policies, plans, and goals and objectives. Research firms like MSCI or Sustainalytics offer third-party assessments and ESG ratings.

This third-party assessment data is helpful to understand where you stand against other companies in the broader ESG landscape. These assessments are also key if you’re considering outside investments in your company. Socially responsible investment firms will look to understand your ESG reporting and scores as part of their decision-making.

IRIS CARBON notes that investors are starting to look to ESG scores as a signal of long-term stability versus financial or credit ratings.

What are the ESG frameworks?

ESG frameworks outline a set of principles and provide guidance on how to structure and prepare the topics in your ESG report. Frameworks and standards work together to ensure a comprehensive, detailed report.

The most common ESG reporting frameworks include:

  • Global Reporting Initiative (GRI) enables organizations to understand and report on their economic, environmental, and people impact to increase transparency on contributions to sustainable development. The GRI encompasses three sets of standards: Universal Standards, Sector Standards, and Topic Standards.
  • Sustainability Accounting Standards Board (SASB) framework is focused on industry-specific disclosures about sustainability opportunities and risks that could affect cash flow or access to finance or cost of capital over a period of time. The SASB is applicable to 77 industries.
  • International Sustainability Standards Board (ISSB) is a newly created framework to merge existing frameworks from the Task Force on Climate-Related Disclosures. This framework will provide a comprehensive global baseline of sustainability disclosures that will serve the needs of investors and financial markets.
  • Corporate Sustainability Reporting Directive (CSRD) mandates companies inside and outside the EU to report on their ESG initiatives. It’s important to note that Canadian companies may be mandated to report on CSRD disclosures if they have operations in Europe. The most common ways that Canadian companies may be subject to CSRD disclosures includes having securities listed in an EU-regulated market; a large EU subsidiary or branch; or a large EU group (like a parent group or EU holding company).
Common ESG reporting frameworks

What's the difference between ESG and sustainability?

ESG and sustainability are related, but don’t mean the same thing. As a broad concept, sustainability is a social goal that people work towards. In a business context, sustainability is a broad view of environmental and social goals and objectives.

ESG is the criteria used to measure a company’s sustainability.

What's the difference between ESG and CSR?

CSR, or Corporate Social Responsibility, is a self-regulated model put in place by companies to help them be socially accountable. CSR pillars include environmental impact, ethical responsibility, philanthropic impact, and financial responsibility. CSR initiatives help companies understand the impact they are having on the world at large.

ESG and CSR can be practiced simultaneously. CSR is a self-regulated framework and qualitatively measures outcomes. CSR frameworks can change, and aren’t held to specific reporting standards outside of the organization. By comparison, ESG is an external facing, regulated report with specific metrics and standards to measure against.

What is an ESG report?

An ESG report provides insight and metrics, including finanical performance, against company’s impact on environmental, social, and governance issues. Additionally, ESG reports identify risks and opportunities within a company.

Why is ESG reporting important?

Investors and other stakeholders look at ESG reports to understand a company’s non-financial information that impacts the long-term stability of a business.

ESG reporting is important for investors as much as it is for consumers. Consumers care about ESG reports to know if they are supporting a company that aligns with their values.

As it stands, ESG reporting is mostly a ‘nice to have’ but soon could be a regulatory requirement that all businesses, regardless of size or region, need to comply with.

Is there a standard way to write an ESG report?

ESG reports follow a standard framework, like GRI or ISSB standards. This ensures that a company presents the required information for investors and other stakeholders to get a firm understanding of your ESG initiatives and outcomes.

How do you write an ESG report?

Writing an ESG report requires the consolidation of data from your environmental, social, and governance systems and software. Since ESG reporting standards can differ based on your company size, location, and industry, and amount of data you need to consolidate, you can use financial performance management software, like Prophix, to speed up your process. This will help you eliminate costly customizations and maintain your regulatory compliance.

Is ESG reporting mandatory?

ESG reporting requirements vary depending on your region. Between mounting stakeholder expectations and growing complexities for company’s with operations across different regions, ESG reporting is not only required, but can be extremely demanding too.

Here’s a look at the requirements by region:

United States

As it stands right now in 2024, there are no mandatory ESG reporting requirements on the federal level in the US. That said, there are many companies that are already doing ESG reporting because their stakeholders – and the public – want to see it.

California is the first state to enact mandatory climate emissions disclosures, coming into effect in 2026. This is compelling for companies to expand their ESG reporting and integrate company-wide disclosure and reporting.

Canada

In 2024, the ESG reporting and climate disclosures is mandatory for large Canadian banks, insurance companies, and federally regulated financial institutions. Additionally, these companies are required to comply with additional reporting, like annually reporting on diversity at the board and senior management level.

As mentioned earlier in this article, Canadian companies may be subject to Corporate Sustainability Reporting Directive disclosures if they have a company, subsidiary, or holding company in an EU-regulated region.

Europe

Europe has comprehensive regulatory reporting requirements for ESG with the Corporate Sustainability Reporting Directive (CSRD) at the helm.

Initially, the Non-Financial Reporting Directive (NFRD) introduced high-level reporting requirements for a number of large companies (over $50M revenue) beginning for financial years starting or after January 1, 2024. This will continue to expand for a group of large EU companies and parent companies of EU groups as of January 1, 2025.

Small and medium size enterprises (SMEs) will be required as of January 1, 2026. And global group reporting requirements for companies headquartered outside of the EU will take effect as of 2028.

For non-EU based companies that do business in EU markets, there may be reporting requirements in place earlier, so it’s best to prepare.

Who reads ESG reports?

Stakeholders or investors looking to make investments in socially responsible companies read ESG reports.

Employees and potential employees read ESG reports to understand how their employer, or future employer, addresses sustainability and environmental issues, and what contribution their role plays in the landscape.

Additionally, as consumers become more socially conscious, they read ESG reports to understand if a company’s values align with theirs to make socially responsible buying decisions.

What should be included in an ESG report?

ESG reports should clearly indicate a company’s committment to environmental, social, and governance activities and its associated impact.

Environmental

The environmental portion of your ESG report should include what is being done to better the environment. For example, this portion of the report outlines the steps and actions taken to address:

  • Climate change
  • Carbon emissions
  • Biodiversity, including air and water quality, deforestation, and waste management
  • Resource usage and supply chain

Social

The social, or people, portion of your ESG report addresses what is being done to improve people’s lives. For example, this includes the steps and actions taken towards:

  • Nurturing people and the workplace
  • Diversity, equity, and inclusion
  • Employee engagement
  • Data protection and privacy
  • Community involvement
  • Human rights and labor standards

Governance

This portion of the ESG report outlines what is being done to ensure investments remain sustainable. For example, this part of your report includes the policies and procedures that address:

  • Internal controls
  • Board and executive compensation
  • Audit committee structure
  • Shareholder rights
  • Bribery
  • Lobbying
  • Political involvement
  • Whistleblower programs

What's the role of finance in ESG reporting?

Finance is a strategic advisor to the business, and CFOs hold a unique position as a steward of the the inner workings of your operations. CFOs understand when and why decisions are being made, and the data, processes, and reports behind those decisions.

ESG concerns are financial concerns. The key to successful ESG reporting lies in your data. But your ESG report is only as good as the quality of the data you are using to compile it, which is why it’s critical that you have processes and tools in place that ensure quality, clean data consolidated from your systems.

By nature, finance teams have expertise in reporting, risk management, and using standards and frameworks to measure progress and inform decision-making. This expertise, paired with strategic insight into the business, positions finance as a key player in an efficient ESG reporting process.

How finance should prepare for ESG reporting

For companies that haven’t been mandated, there is benefit to getting ahead and future-proofing yourself. Prepare for changing regulations and requirements by doing a readiness assessment. Understand where your data is, how you’re collecting it, and understand reporting and governance structures. It’s key to analyze what makes sense as a baseline when you’re ready (or mandated) to begin your ESG reporting.

How to incorporate ESG into your budgeting and planning cycle

At it’s core, budgeting and planning mitigates risk and plans for a stable financial future. ESG is similar in that you’re mitigating risks associated with ESG and planning how you’ll meet your sustainability objectives.

To streamline your reporting, ESG should be baked into your budgeting and planning cycle. And similar to budgeting and planning, should be consistently monitored. ESG programs shouldn’t be a one-and-done. Much like budgeting and planning, ESG programs require consistent performance monitoring against your objectives to ensure you’re on track to meet your goals and commitments.

To do this, your financial strategy should align with your ESG objectives. This ensures finance – and the organization at large – are working towards the same desired outcomes. It also ensures that you are collecting the relevant data points and metrics to create a robust, detailed ESG report for stakeholders, employees, and consumers.

How to conduct a materiality assessment

A materiality assessment is a strategic business tool that defines the social and environmental topics that matter to your business and your stakeholders.

According to KPMG, there are 7 steps to conduct a materiality assessment:

  • Define the scope and purpose to understand what it means for your organization, and set clear objectives and define your audience.
  • Identify potential topics with a list of potential material topics.
  • Refine your list and group your topics into categories.
  • Understand the impact and importance of the topics and the relevance to your business and stakeholders.
  • Prioritize material topics based on strategic importance (to the business, stakeholders, and ESG impact) of each topic in the value chain.
  • Test the results of your materiality assessment with key audiences to validate your outcomes.
  • Follow up with stakeholders to gather feedback on the topics reported.

7 ESG report examples

Now that we’ve covered what an ESG report is, ESG mandates and reporting frameworks, and how to create an ESG report, let's look at a few examples of ESG reports.

1. Microsoft

Microsoft is working towards a sustainable future. Their ESG report includes their guiding principles, metrics that measure their progress, and their sustainability programs.

ESG objectives
Microsoft publicly shares their sustainability commitments and detailed plans to work towards a sustainable future, including carbon emissions, water, waste, and protecting ecosystems. Microsoft also offers their own products, like the Microsoft Cloud for Sustainability and the Emissions Impact Dashboard, for any Microsoft users looking to track their ESG programs.

Reporting frameworks
Microsoft follows a number of frameworks for their ESG reporting, including global standards like Sustainable Accounting Standards Board (SASB), UN Sustainable Development Goals (SDGs), and the Global Reporting Initiative (GRI).

Additionally, Microsoft follows issue-specific standards like the Task Force on Climate-Related Financial Disclosures (TCFD), Greenhouse Gas Protocol, EEO-1 Diversity disclosures, and CDP disclosures.

2. IBM

IBM aspires to make a lasting, positive impact in business ethics, the environment, and the communities where we work and live.

ESG objectives
IBM breaks down their reporting into the three ESG buckets and defines the objectives of each:

  • Create transformative Environmental Pathways
  • Leverage technology to create diverse, equitable, and inclusive communities
  • Create practices and policies to increase trust and transparency

Each pillar dives into specific commitments. For example, reach net zero GHG emissions by 2030 or log 4 million volunteer hours by 2025 – and what steps they are taking to reach their goals.

Reporting frameworks
IBM publishes a report on corporate social responsibility (CSR), Global Reporting Initiative (GRI) reports, and ad-hoc publications on particular areas like DEI.

3. Netflix

Netflix’s Board of Directors oversees their ESG efforts and receives regular updates on their progress and commitments.

ESG objectives
Netflix outlines the following topics as areas under each pillar.

  • Environmental: Sustainability strategy, climate risk, and sustainability on and off screen
  • Social: Inclusion and diversity, supporting our people, and responsible products
  • Governance: Corporate governance, enterprise risk management, ethics and compliance, and intellectual property protection

Reporting frameworks
Netflix uses the Sustainability Accounting Standard Board (SASB), Global Reporting Initiative (GRI) and Task Force on Climate-Related Financial Disclosures (TCFD) as their relevant reporting frameworks.

4. Apple

Apple is committed to demonstrating that business can and should be a force for good.

ESG objectives

  • Environmental: Make carbon neutral products by 2024
  • Social: Continue to put people first by empowering them with accessible technology, being a force for equity and opportunity, creating an inclusive environment, and respecting human rights of everyone whose lives they touch
  • Governance: Ensure the governance structure fosters principled actions, informed and effective decision-making, and appropriate monitoring of compliance and performance

Reporting frameworks
Apple measures their ESG disclosures against the metrics outlined in the Global Reporting Initiative, Sustainable Accounting Standards Board, and the Task Force on the Cilmate-Related Financial Disclosures voluntary disclosure framework.

5. Fed Ex

Fed Ex believes a connected world is a prosperous and sustainable world. By investing in safe and sustainable networks, Fed Ex can improve the standards of living and reduce their environmental footprint.

ESG objectives

  • Environmental: Achieve carbon neutral operations by 2040 through vehicle electrification, sustainable fuels, fuel conservation and aircraft modernization, and facilities
  • Social: Improve quality of life of employees, continued integration of DEI into business strategies, and health and safety
  • Governance: Ensure a safe and secure online environment through cybersecurity, participation in public policy and advocacy, and impact on the global supply chain

Reporting frameworks
Fed Ex uses the indicators in the Global Reporting Initiative (GRI) Standards, Sustainability Accounting Standards Board (SASB), and the Task Force on Climate-Related Financial Disclosures (TCFD).

6. Home Depot

Home Depot has three pillars of their ESG strategy: focus on our people, operating sustainably, and strengthening our communities.

ESG objectives

  • Environmental: Reduce carbon footprint through improved efficiency of operations and supply chain and alternative energy solutions
  • Social: Investments in improving veteran housing, supporting communities affected by natural disasters, and training skilled tradespeople to fill the labor gap
  • Governance: Respect for all people, DEI is celebrated, and employees have opportunities to grow

Reporting frameworks
Home Depot measures their ESG metrics against Global Reporting Initiative Standards, Sustainability Accounting Standards Board disclosures, Task Force on Climate-Related Financial Disclosures, and EEO-1 Report.

7. American Express

American Express has an ESG mission that backs people and businesses to thrive and create equitable, resilient, and sustainable communities globally.

ESG objectives

  • Environmental: Commit to net-zero emissions by 2035, enhance the management of climate related risks and opportunities, pilot low-carbon product innovations, provide $10M in support of initiatives, partnerships, and programs that address effects of climate change, and engage employees in sustainability initiatives
  • Social: Promote DEI goals like 100% pay equity, provide access to capital and financial education to underrepresented-owned SMBs, develop inclusive marketing initiatives, and provide $50M in grants to nonprofits who address inequality and promote social justice
  • Governance: Building financial confidence through providing 5 million individuals with tools, resources, and educational content to improve financial well being, support small businesses by reaching $100B in spending by consumers on Small Business Saturday, and investing $500M to build resilient and equitable communities

Reporting frameworks
American Express maps their ESG reporting to the Global Reporting Initiative Standards Core Option, Sustainability Accounting Standards Board, and the Task Force on Climate-Related Financial Disclosures.

Common questions about ESG reporting

Now that we’ve covered ESG in depth, what it means for finance, and ESG report examples, let’s answer some frequently asked questions about ESG reporting.

What does a good ESG report look like?

An ESG report is a perfect opportunity to tell your company’s story. Ensure it is articulate, outlines the core issues or pillars of your ESG strategy, how and why you’ve chosen those issues, and the steps you are taking to achieve the goals and objectives you’ve set out. CFOs should have involvement, and provide input and oversight into ESG reporting.

Is ESG reporting mandatory?

ESG reporting mandates are dependent on your region. For example, in the United States, ESG reporting is not mandatory yet, but companies should take the steps to prepare. The Securities and Exchange Commission (SEC) is taking steps on climate-related regulations.

Is an ESG report the same as a sustainability report?

ESG report and sustainability report are terms that are often used interchangeably and serve the same purpose: for a company to report on environmental, social, and governance (ESG) impacts.

However, sustainability is a broad view of a company’s goals and objectives, where ESG is the criteria used to measure a company’s sustainability.

What are ESG regulations?

ESG regulations are defined government standards for reporting on ESG actions, reporting, and disclosures.

What are some ESG frameworks?

Common ESG frameworks include the Global Reporting Initiative (GRI) Standards, Sustainability Accounting Standards Board (SASB), International Sustainability Standards Board (ISSB), and the Task Force on Climate-Related Financial Disclosures (TFCD).

Conclusion: Create ESG reports with Prophix

ESG reporting provides a holistic view of your company’s sustainability efforts and responsible business practices. The regulations, standardized frameworks, and reporting guidelines help ensure that you’re consistent and comparable across different companies and industries.

But complying with ESG reporting requirements can present a significant challenge without the right tools to collect, manage, and analyze the data that goes into an ESG report. With Prophix, you can meet your ESG goals with confidence and streamline the data collection, management, and analysis for end-to-end reporting and planning. 

Learn more about ESG reporting with Prophix.

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