Why ESG reporting is every organisation’s responsibility

In 2011, less than 20 per cent of companies in the S&P 500 index published an annual sustainability report. By 2019 that proportion had grown to 90 per cent1. In this white paper we look at what’s driving companies to disclose detailed information about their emissions, use of resources and labour practices.

We consider the implications for supply chains, in particular second and third tier suppliers who may not yet be under pressure to report their performance, but who can see the day approaching when that will change.

We also consider solutions for small and medium sized enterprises who need help along the pathway to reporting and disclosure.

Introduction – why your business is coming into scope

It is easy to think of ESG (Environment, Social and Governance) reporting as something that only large enterprises need to concern themselves with. After all, while institutional investors are laser focused on disclosure, performance and ratings, investors in small and medium sized enterprises (SMEs) seldom demand anything like the same levels of transparency.

But that thinking is faulty. ESG reporting for any organisation is only as good as the data coming out of its supply chain. That’s why more and more corporations are setting targets not only for their own operations but also for their suppliers.

It would be no exaggeration to say that big business is outsourcing a significant proportion of its environmental responsibilities. If that sounds like a criticism, it is not meant to. A large company is simply the terminus point for a global supply chain that may involve hundreds, thousands or even tens of thousands of smaller enterprises.

It is not just materials, products and services that flow through supply chains, so do a multitude of environmental and social impacts.

The emissions associated with growing, picking and packing green beans in Africa, for example, will, at some point, show up in the environmental reporting of the supermarket in Europe that sells them.