Why Sustainability Reporting is Important for New Businesses
Over the last three decades, the momentum for sustainability reporting has been increasing. Now, it is becoming the defining platform for both private and public organizations. As a new business, you have a huge responsibility of ensuring it follows all the established laws and craft a good strategy for success.
To achieve this success, you also need sustainability reporting. This post demonstrates why sustainability reporting is one of the most important pillars for business success.
The primary reason why you need ESG sustainability reporting is that stakeholders are now demanding more responsible businesses. They are more enlightened about the causes of global problems, such as global warming and loss of biodiversity, and want to be on the front line addressing them. This is not the only reason for adopting sustainability reporting. Keep reading to learn more about ESG reporting and associated benefits.
What is ESG Sustainability Reporting?
Before looking at the main reasons for ESG reporting, let’s start with the definition. ESG sustainability reporting is the disclosure of a company’s information in three main areas: environment, social, and governance. The concept has its roots about 30 years during the first UN Conference on Environment and Development (UNCED).
The idea of ESG reporting is based on consciously planning for sustainability in your business. If it is waste coming from your facility, you can consider reducing it as an objective and reporting topic. Other areas of interest include energy efficiency, diversity, and resources allocation. If you do not have a clear plan for your ESG reporting, the entire process will be considered greenwashing.
The ultimate goal of ESG reporting is to create a report that stakeholders can use to make decisions about the company. Today, most stakeholders want to be associated with responsible companies because that will push them to also focus on addressing issues facing the globe.
Key Reasons Why You Need ESG Reporting for Your New Business
One of the reasons why no new business should be left behind in ESG reporting is that it makes it easy for companies to review their operations. The first step of the process involves a comprehensive analysis of a business’s system to understand its key challenges and opportunities. Then, you create strategies to take advantage of the opportunities and address the challenges.
This will be your first step to the expected success. Other reasons for adopting ESG sustainability reporting include:
ESG Reporting Helps You to Stay Engaged with Stakeholders
As we have highlighted, ESG sustainability reporting is mainly about stakeholders. The process helps you engage and make them feel part of the organization. If you are targeting investors, ESG reporting will help them see through your strategies and decide to work with your company. They want to see a responsible business, and ESG reporting will make your enterprise deliver their expectations.
It is the Best Route for Compliance with Legal Requirements
Although many jurisdictions do not have direct laws labeled ESG reporting, their policies, and rules for operations point at it. For example, the UK, the US, Australia, Singapore, China, and other jurisdictions have clear waste, emissions, and labor policies.
You can comply with these through ESG reporting. Again, individual regulatory or facilitating platforms, such as Hong Kong Stock Exchange (HKEX) and London Stock Exchange (LSE), have indicated that listed firms must produce ESG reports. As more parties appreciate the benefits of ESG reporting, it is expected to become one of the primary legal requirements, and it is better to be on the right side of the law for your business to thrive.
Helps to Cut Down Operation Costs
ESG sustainability reporting advocates for high efficiency, reduced waste production and long-term planning. All of these help to achieve one thing: reduced cost of production. For example, increasing your machinery’s efficiency can help reduce power consumption and improve the quality of your products. Although the cost of ESG reporting might appear high at first, it will be very small when looked at in the long-term.
Reuse and recycle to reduce your waste, image source: pixabay.com
These are only a few reasons why your new business should adopt ESG reporting. You will get a lot more. However, the process can be pretty complex, especially for new businesses, and it will be good to have the right ESG sustainability reporting software. Visit Diginex.com to learn more about ESG and implement it correctly to enjoy the benefits we have listed above.
