Challenges of Implementing ESG Reporting
What is one of the best methods of helping an organization to grow and make a positive impact on the society? Sure, there are a number of ways, but ESG sustainability reporting is the most notable. This is a process of reporting an organization’s social, economic, and environmental impacts to help the society appreciate what you are doing in making the world a better place.
The process is aimed at helping to address problems such as environmental degradation, social injustices and poor financial performance of organizations. Once done well and in line with the main principles of ESG reporting, you will enjoy notable benefits that will make your organization stand out from others in your industry. Keep reading to understand the main benefits and challenges of ESG reporting.
Benefits to Expect from ESG Reporting
Before we can highlight the main challenges that come with sustainability reporting, it is paramount to start by looking at the benefits to expect. The main advantage of using corporate sustainability reporting is increased awareness of the available opportunities and risks. Because the process starts with reviewing the business processes, it becomes easy to note where the enterprise is doing poorly and need adjustments. For example, improving the efficiency of the machinery in your facility helps reduce waste at the source, slash emission rates, and improves the overall production rates. Other benefits of using ESG reporting include:
- Better long-term business planning.
- Support for sustainability goals.
- Cutting down the costs of operations.
- A sure way to build better relationship with stakeholders.
- Enabling customers to make informed decisions.
- Mitigating the effects of environmental impacts on the globe.
The Challenges of Implementing ESG Reporting
While the list of benefits that come with ESG reporting can be long, you also need to be aware of the challenges to anticipate. The main one is the cost of implementing changes. The overall cost of the reporting process depends on the activities that you opt to take.
Take the example of a company that opts to fund green community initiatives. In such a case, the organization will need to budget for the initiative. However, the effects will be worth the cost because such efforts can help to promote the regeneration of biological species and draw more carbon dioxide from the atmosphere. Apart from the costs, other challenges include:
- Making other stakeholders adopt ESG reporting too: To get more benefits from ESG reporting, it is good to encourage others to adopt the process. However, this is never easy because each of them is an independent entity.
- Resistance to changes: While ESG reporting comes with impressive benefits to staff, they are not always easy to see for all. In some cases, especially where automation is being adopted to increase efficiency, resistance to changes can be so high.
- Disingenuous companies: Because the process of ESG reporting largely relies on the commitment of an enterprise’s management, it can be challenging when some are dishonest. This means that they get to enjoy the benefits of sustainability reporting with little or no effort at all. The ultimate danger of this is that even those that are committee to genuine reporting might finally slip back.
Although ESG sustainability reporting comes with major challenges for businesses, its benefits are many and worth pursuing. To overcome some of the challenges and enjoy the process of reporting, you should consider automating it using appropriate software. For example, using Diginex Solutions makes it possible to integrate the process with your management system, allowing different departmental heads or authorized persons to add data for sustainability reporting. It is not only easy but fast, reliable and accurate!
