If you are a manager or own a finance-related enterprise, such as a bank, equity venture, or insurance firm, there are a number of things required for success. First, you need to have a clear understanding of the market to offer services that will address the needs of the targeted audience. Other key requirements include compliance, labor regulations, and now, ESG sustainability reporting.
Sustainability has become the new platform upon which all enterprises need to gauge their operations. It is aimed at helping companies operate responsibly so that they can help in addressing global challenges, such as global warming and human trafficking. In the finance sector, ESG reporting is even more important. This post takes a closer look at ESG sustainability reporting to highlight the benefits to expect as a player in the finance industry.
A Case for ESG Reporting
Before looking at the benefits of ESG sustainability reporting, let’s start by understanding what it is. ESG sustainability reporting is the disclosure of a company’s environmental, social, and governance impacts from its operations. Ultimately, your organization is required to create a report that will be published for stakeholders to read and understand the company’s operations. From the report, stakeholders will be able to decide whether to buy your products, invest in the company, or join its community.
In the finance sector, some people might ask, “why ESG reporting yet we do not produce emissions?” A bank or insurance firm’s carbon footprint might indeed be lower than a manufacturing firm, but the supply chain, be it the use of papers/ printing ink or electricity, still has a connection to the larger global economy. Furthermore, the impacts that arise from global problems affect all, including the finance sector. Therefore, your firm must be at the front line to push for responsible businesses.
ESG sustainability reporting in the finance sector is guided by a number of principles, including materiality, neutrality, clarity, and verifiability. The report you create must also be easy to read and comparable.
Benefits of ESG Sustainability Reporting in the Finance Sector
As an enterprise in the finance sector, there is no doubt that the focus is optimizing profits and keeping the costs low. Well, you can achieve this through sustainability reporting. By creating accurate ESG sustainability reports, more stakeholders will want to be associated with you. Clients will buy from you and become your ambassadors who will spread your brand’s image. This might be all that you need to grow sales and profitability. Other benefits include:
- You Have the Satisfaction of Helping to Address the Global Challenges
The global challenges, from human trafficking to loss of biological diversity, have become too much and are pushing us to the edge. For example, global warming is threatening the globe with serious issues such as extensive draughts, rising water levels that threaten low-lying islands, and pandemics. By adopting ESG sustainability reporting, your finance organization can become part of the force aimed at addressing these issues.
- Helps You in Defining the Future Success of the Enterprise
The primary goal of ESG reporting is creating reports for stakeholders, but there is a lot more. The process helps you to take a peep into the future of the business by thinking about the challenges that lay ahead. Then, you can devise means of addressing them. This will help you stand out from the rest and impress investors because they will appreciate your firm can withstand even the toughest times.
- Crucial for Compliance
In the finance sector, there are so many requirements for compliance. We will highlight one here. One of the requirements for a company that targets listing in the Hong Kong Stock Exchange (HKEX) is providing comprehensive ESG reports. The UK government and New Zealand have indicated that ESG reporting will be mandatory in the next few years. This is the beginning as other jurisdictions are considering similar measures. So, you better start reporting right away.
As you can see, ESG reporting is a good thing because it comes with so many benefits for your company. To ensure the process is done correctly, make sure to have the right ESG reporting framework and ESG management software. Visit Diginex.com now for greater insights into the process and top-rated programs.