MK: How do you counsel clients on integrating new reporting frameworks – such as the TCFD and SDGs – into their reporting, particularly if they already align with the GRI?
WG: We’re excited to see such a range of frameworks and standards. Contrary to common belief, I think they’re actually improving consistency and quality –- from climate risk and financial disclosures (e.g., SASB, TCFD) to sustainability and purpose-driven reporting (e.g., SDGs, GRI). The GRI isn’t the only act in town, so it isn’t always easy to choose the perfect mix of frameworks, especially when companies have different needs to meet.
When advising clients, we first try to understand -- and anticipate -- their stakeholders’ wants and needs, and then discuss what they should really be trying to achieve in terms of their strategy, governance, metrics and communications, including reporting.
There is no one-size-fits-all approach because most analysts still don’t really know what they want, so we recommend that companies report on a combination of two or three frameworks. But when sharing the data, don’t forget the story. Context matters.
MK: What issues do the report issuers you are working with struggle with the most? What are their greatest concerns?
Additionally, companies are really trying to gain trust and support from their stakeholders and are struggling to find the right mix of tactics to inform, engage and inspire them. While PDF reports and data tables are a necessity, more companies are investing in mainstream marketing, digital campaigns and communications strategies. These efforts are strengthening their presence as purpose-driven brands, and encouraging interaction through open innovation, online forums, engaging videos and gamification. We’re bringing sustainability to the masses.
Lastly, in an age when the stakeholder is the new shareholder, many companies are having an identity crisis. The other day, I read one company’s vision: to become a mid-tier gold producer. And it was nothing short of depressing. How can an employee, a community member or shareholder buy into that? On the other hand, I see “purpose” being used superficially, sometimes inflating a company’s role in, or perceived benefit to, society. The SDGs seem to be helping companies connect to something bigger than themselves and are inspiring a level of introspection that is helping some companies to genuinely consider, and later share, their purpose.
MK: What are one or two things that you wish all reporting organizations would stop doing? Do more of?
WG: I won’t make any friends by saying this but stop complaining and stop trying to keep up with the Joneses. There’s a hell of a lot of work that needs to be done at all organizations to get them into a space where they are fit for the future.
The present is the past, so you can gain perspective by continuing to engage with those who you trust (which, in our emerging space, may include those who you have not yet met, based in other parts of the world), who can help you to understand the broader landscape, challenge hypotheses and refine your strategic plan – including your reporting choices.
When you think you’ve figured it all out, you’ve lost perspective.
MK: Are you seeing, through reports, greater evidence that companies are integrating CR/ESG into their business strategies – through risk management, new products and services that address environmental/social challenges, etc.?
WG: More companies are developing integrated reports that, in many cases, include details on how they create value. They highlight the focus areas where they aim to make wider social impacts, and the outcomes of investments in people, assets, relationships and other capitals.
Since it can take companies up to two or three years of internal alignment to develop their first integrated report, it’s fair to assume that many of them are adapting their strategy to embed a wider range of environmental, social and governance factors into their financial disclosures.
But many companies are still at “stage one” (i.e., admitting there is a problem). After doing this, they still often need to set meaningful long-term targets in a way that will inspire ideas and actions from a critical mass of ambitious and talented people. This is what is required to deliver the change that is needed for a restorative future. So, we have a long way to go before we can feel good about ourselves.
MK: What shifts have you witnessed in CR reporting over the past five years, including any geographical or sector differences?
WG: I’ve been involved in reporting for about 15 years. During this time, I’ve seen shifts from storytelling-heavy documents to data-only reports that lack context. More recently, I’ve noticed that a lot of reporting has started to offer smart functionality enabling companies to develop a better experience for multiple users at once.
MK: What are your predictions for the future of ESG reporting?