The global social and environmental challenges are becoming more apparent to households That’s as well as corporations and governments. In addition, analysts and investors on capital markets are now expanding their valuation models. All by appreciating that for long-term success, investor focus must go beyond profit optimization. This is why calls for the adoption of ESG reporting principles have intensified, with the target being to promote more responsible firms in the stock market.
Although some companies might have already started the process of reporting through corporate social responsibility, which is a good thing, now they need to harmonize it in line with ESG principles.
In this post, we highlight the financial benefits of ESG sustainability reporting that every manager should know:
Better Access to Capital
When you provide ESG sustainability data to investors, it improves the company’s transparency, which helps in two ways. One, the transparency gives investors an opportunity to easily identify the portfolios that have lower risks and better stock performance on the market.
Some frameworks for ESG reporting, such as SASB and CDP models, were created with the investor in mind. Therefore, they have specific issues with the potential to impact the financial performance of a company.
Two, the transparency demonstrated by the company through ESG reporting is also likely to attract more investors. For example, there is a noticeable shift, especially from institutional investors, towards environmental, social and corporate issues.
This is why capital markets, such as New York Stock Exchange, London Stock Exchange and others, are now adding ESG reporting as a requirement for listing to increase investor confidence. The most recent exchange to add the requirement for sustainability reporting is the Hong Kong Stock Exchange.
More Business Opportunities
As a business manager, one of the main goals for running a business is seeing it grow, perhaps from a local firm into a global brand. So, how exactly do you achieve this? Although a number of factors come into play, one of the most important is ESG sustainability reporting as offered by Diginex. The process of ESG sustainability commences with a clear evaluation of a company’s operation and the setting of goals. It also exhaustively explores the business risks and opportunities to target.
Whether you target to expand the company, cut the cost of production, build partnerships, or grow sales, all of these can be achieved using ESG sustainability reporting.
The reports you create will become crucial documents that all stakeholders, especially clients, can check closely to determine whether to buy from you or others. So, simply determine where you want to go, define the preferred process, and there is nothing that is impossible with ESG reporting. It is because of this focus that over 90% of the companies on the SP500 Index now give reports on sustainability.
Better Communication and Brand Reputation
The process of ESG sustainability reporting commences with the identification of the organization’s main stakeholders. Then, this review extends to their interests and material information requirements. Thereby implying that communication with them is central. If you are looking forward to redefining the main products, bringing the targeted clients will be crucial for higher acceptability.
The enhanced communication and engagement signals long-term thinking and reliability. All that helps to grow the company’s reputation. This might be all that your company needs for more sales and profits. I mean better performance of the stock on capital markets, and fast growth.
Companies that have implemented ESG excellently indicate that it is an important driver. All for their financial performance. You, too, should not be left behind. Especially in adopting it as part of your operational strategy. Remember that the process should to be smooth and deliver the targeted goals well. Finally it is crucial to work with appropriate sustainability reporting software.
