(Expansion) – For a long time, although with greater momentum in recent years, environmental, social and governance (ESG) issues have caused the decision-making process in companies around the world to transform, not only for its internal management, but also in terms of the external perception of its investors, clients, consumers and other interest groups. According to the KPMG Survey of Corporate Responsibility Reporting 2020 , 80% of the world’s top-earning companies integrate ESG information into their annual reports.
ESG issues allow a global vision of the organization, making it possible to anticipate regulatory, financial, legal, technological, fiscal, macroeconomic, reputational risks, as well as those related to climate change, natural disasters or possible contingencies, such as those caused by COVID-19.
In Mexico, according to The Sustainable Horizon in Mexico, the first local adaptation of the global KPMG Survey of Corporate Responsibility 2020 study , 75% of companies use the Global Reporting Initiative (GRI) standards as a guide to prepare reports, and 54% of those report in Mexico link their business activities with the Sustainable Development Goals.
Today there are numerous standards to measure ESG information, and although this diversity of methodologies has generated confusion for companies about what is more relevant to report, reality indicates that investors demand this type of information with different approaches and high levels of specialization .
One of the main tools to meet the requirements of investors, and, at the same time, the need for information from other stakeholders, are corporate responsibility or sustainability reports, which can be prepared following one or more reporting standards. international standards, which are applicable to any organization regardless of its industry, size or place of origin.
GRI, ODS, IR, SASB and TCFD are the initiatives most used to report on the ESG performance of companies. Its standards allow you to standardize and compare information with respect to your industry or region, providing useful elements for making decisions.
For more than 20 years, GRI has been the initiative most used by organizations to report on material issues related to their economic, environmental and social performance. Its standards allow information to be ratified and analyzed regardless of the industry or region to which the companies belong.
The Sustainable Development Goals define priorities on the subject at the global level and aspirations for 2030. They seek to mobilize efforts between governments, companies and society around a set of common objectives and goals.
The Integrated Reporting Framework (IR Framework) initiative places special emphasis on determining which topics are relevant to the company and how they influence its ability to create value through the use of capital.
Sustainability Accounting Standards Board (SASB) standards help companies report financially material and useful sustainability information for each industry.
The recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) are focused on achieving transparency, comparability and consistency in the disclosure of information on the risks posed by climate change, as well as possible opportunities for actions to stop it. The objective of implementing the suggestions is to regularly consider the effects of climate change within business and investment decisions.
Although the scope and motivation of stakeholders for this information is often different, there is a common message: it is urgent to improve consistency and comparability in sustainability reports.
For this reason, the International Organization of Securities Commissions (IOSCO) and the International Financial Reporting Standards (IFRS) Foundation , important global regulatory bodies, are working on a methodology that homologizes standards with a shared vision to achieve more integrated reports.
Sustainability reports, appropriately focused, communicate valuable data to stakeholders. In addition, preparing them periodically allows us to have comparable information internally, which can also be contrasted with competitors, peers and companies from other industries that report under the same standards.
The importance of managing information under these methodologies is due to the fact that this facilitates the establishment and monitoring of specific, achievable, relevant and measurable objectives over time. Undoubtedly, greater transparency leads to better decision-making, which helps to build and maintain stakeholder trust in companies.
Editor’s note: Jessica Jiménez is the Director of Sustainability Consulting for KPMG in Mexico. Follow her on. The opinions published in this column belong exclusively to the author and do not necessarily represent the ideas and opinions of the company for which she works.
