How To Launch Your First ESG Report Without Experience
Publishing your first ESG report can seem daunting, especially if your team has no prior experience with ESG. But there are ways to simplify the process and ensure your first report is a success. ESG Strategists, Leigh Anne Bishop and Jonathan Fisher, are joined by ESG Lynk consultants, Katherine Warren and Jennifer Sadenwater, to discuss where to start with your first report.
In this episode, we walk through the critical success factors of an inaugural report for companies that want to participate in the ESG movement but don’t know where to start.
Table of Contents
- Building Your First ESG Report
- Public vs. Private: What Are the Reporting Differences?
- Timing and Distribution of an Inaugural Report
- Inaugural Report Success Factors
Here's the executive summary with 5 key success factors:
- Determine your objective and make sure there is buy-in.
- Decide on your approach and reporting framework.
- Don't worry about developing an ESG strategy, it's revealed in the reporting process.
- Develop a plan to distribute your report internally and externally.
- Don't wait. Get your story out there so you control the narrative.
*This transcript has been edited and formatted for readability.
Building Your First ESG Report
Kyle Smith: So today's episode is a guide for companies new to ESG reporting. Where do you start? What are common mistakes you can avoid and what are rating agencies looking for? So in the last 18 months, Jennifer and Katherine, you've written several ESG reports for first-time reporting companies. Jonathan and Leigh Anne, you've helped on the print and web development side of a number of first-time reports. So from your collective experience, what would you say are the success factors to consider when developing a year one report?
The Importance of Determining Your Objective
Katherine Warren: Well, we recommend that before you've launched into developing a report, you understand internally, what is the objective? What are you trying to do with the report? Who is your audience? Who do you want to read this report and get more information out of it? So once you know your audience and your objective, then you're going to be able to scope what your message should be. And at that point, we often see people going out to look at what other reports look like and start comparing themselves to other companies. So that's why it's important to know what your objective is.
Jonathan Fisher: I would elaborate on the stakeholders a little bit. Why don't you guys break down the many buyers for this process?
Katherine Warren: So a lot of our customers are being brought to the table for an ESG report by their investors, by institutional investors, by their shareholders. And as a result of this, we see boards then getting involved as well. So when you have the investor as your primary audience, you want to make sure that your information is accessible and you're not over-reporting and they don't have to go through a lot of extraneous information or pages or diagrams to find what they need.
The other audience could be your employees. It could be future employees. It could be your customers. Lots of times customers now are expecting their suppliers to be consistent with their ESG expectations. And it often is a deal-breaker if you’re looking at a big, complex RFP or negotiation process that you have a clear ESG report.
Jonathan Fisher: We've seen this data show up on the HR side, even in the recruiting for the employees, right? You mentioned employees, but even the future employees are looking at these reports now deciding if they want to go work for the company.
Katherine Warren: We're seeing that when part of your talent strategy is trying to attract younger generations who want to make sure that your company is walking your talk and understands what part of environmental, social, and governance topics are relevant to your business and where they should be transparent with the topics that impact their business. This is very important to a lot of the generations that are entering the workforce or have just recently entered the workforce.
Leigh Anne Bishop: You think about brand loyalty and, especially in the year of 2020, I think that having a good sustainability presence and being as transparent as you can in these three different areas (ESG), it really shows that you're not just talking the talk, but that you're really walking the walk and you're answering to all of your stakeholders, whether they're internal or external.
And I think that that brand loyalty will carry you a long way in times of stress in the market. Especially in the different industries, whether it's the energy industry or the medical industry that we've seen this past year, it's not just about financials and it's not just about responding to investors. That isn't the end game. That's not the long-term benefit. And I think it's really interesting where you see a lot of people sticking with brands this past year that maybe they wouldn't have otherwise,
Jonathan Fisher: I think about the media use of these reports as well. You know, we've seen historical catastrophes and disasters affect companies. And I think sometimes the analysts are going out there as well as the reporters and looking to see what this company was doing to mitigate risk in this process.
How Do You Select a Reporting Framework?
Kyle Smith: How about the process of selecting a framework and determining what your approach might be when doing a first-time report?
Jennifer Sadenwater: What we recommend to most clients when they're starting, especially for a year one ESG report, is using SASB, the Sustainability Accounting Standards Board. The metrics suggested by SASB really connect businesses and investors on the financial impacts of sustainability. And they are industry-specific and based on metrics that companies most likely already collect data for. So that makes them very cost-effective and efficient to implement.
And they consider what's material for your business based on your industry, because not all metrics are created equal in terms of their significance across industries. What's significant to one may not be for the next one. As this whole space is changing and there's a possibility of future regulation, they position a company very well if they want to seek assurance on this type of data in the future so that they have the proper data available that could be audited. No matter your framework of choice, whether it’s SASB or something else, when you're documenting your ESG story, it's important to focus on the quality. Don't just talk the talk, but walk the walk and focus on quality over quantity of information and avoid that boilerplate language. Because stakeholders want substance. And they really want to know specifically how you're performing under each of the E, S and G categories and what commitments you may be making for the future.
Leigh Anne Bishop: And for the future, you don’t have to disclose everything, right? You can say, “well, we're just not ready to disclose something” or “that's not pertinent to our business so we don't have anything to disclose.” But I think it's important to start and make that commitment. And I think what ESG Lynk really helps people see is that it's not just reactionary to the initial call from investors, but it's a long-term game. It's sustainable going forward, where we're going to make plans and set benchmarks and have targets for 24 months out, three years out, five years out.
And so I think that's a key ingredient realizing that when you get into your first report, you are getting into it for the right reasons, or maybe the wrong reasons, maybe you're reacting to somebody, but at least you're starting and you understand what your intent is. And I think that's what ESG Lynk helps clients do. Where they thought, “Oh gosh, we don't have anything to say.” Well, holy cow, they've got a whole bunch of stuff and they didn't realize it. And it was right there in front of them.
Jennifer Sadenwater: I think even in those instances where you have clients that may be reacting to a request from investors and that's their driving factor for starting an ESG report, through the process, along the way they realize the value they really do. And some clients have said, “Well, what if we don't have an ESG strategy? Or we don't think we have one, or where do we need to develop one first?” And whether you define it as an ESG strategy or not, you have one. And through the reporting process, it's revealed because the conversations that need to happen and the process of data collection just revealed the strengths and areas for improvement in future years. And not disclosing everything at once, you need to have space so that you can build upon it, too.
Leigh Anne Bishop: And Katherine, you said the other day the process just reveals itself, doesn't it? I mean, reveals the strategy itself.
Katherine Warren: It does. And as Jennifer said, we'll start with a customer that says, well, wait, we're not a wind company. You know, we're not going to go out and put a bunch of solar panels on our operations. So this is not relevant to us. And as we go through the process of identifying environmental, social, and governance topics, you do realize that there are topics that are relevant to your business, even if you weren't doing an ESG report formally. So that's part of the process, even deciding which topics are important to the company and start building your disclosure strategy.
And remember it's important to remember that nothing's required right now. So you could go through this process of assembling all the disclosures that would be potentially relevant and not putting them in the report, but you track them year over year. And you watch as the market changes, you listen as your customers might start to say something different, or if your investors bring it up. But just because you start to put your head around the different topics doesn't mean it goes right into a report full 100%.
Leigh Anne Bishop: And it's going to change and evolve over time. Right? I mean, who could have predicted a global pandemic or who could have predicted all of the social issues that we encountered this year.
Is There an ROI Attached to the Reporting Process?
Jonathan Fisher: Is there something of a chicken and egg that you find that's out there where it's ESG strategy is business strategy and business strategy is ESG strategy? And that what gets measured and tracked improves? So there is an ROI attached to this process that aligns the original business goals to begin with?
Katherine Warren: Yep. Well, if you think about why a company would use a metric for anything, it's to measure your progress on something that's been deemed important for the business's objectives and strategy, right? So how are you doing as a business? And it could be anything from safety to revenue growth to, you know, pick what it is all we're doing now is adding to that population of metrics, topics that are in environmental, social, and governance that you may possibly already be collecting and measuring.
But now you're able to show how that impacts the performance of the company. And especially if it's relevant enough, it's impacting the financial performance. So that's why it's important not to start with this huge group of metrics. You should really look at the ones that are relevant for your industry, because the chances are it's going to advance your business strategy. Even if that wasn't the original intent.
Leigh Anne Bishop: I have a friend of mine and he was given two other competitor reports and he's like, “Well, we have to do a report,” said the CEO because our competitors are doing reports. So we have to do one and he doesn't know where to start, you know? And I think that the important thing is just to try and find what's relevant to your business. You don't worry about anybody else. Do you know what I mean? I mean, you can do comparisons, but we're not measuring you against other people. We're measuring you against you and how you did last year and how you might do next year. And if this happened, what would you do? You know, are you planning for risk? Are you mitigating issues? So it's really interesting how it's evolved over the past, I would say at least five to seven years that I've been part of these.
Reporting Is an Opportunity, Not a Burden
Jonathan Fisher: I think it's really important for these first movers to think about that perspective. Is it a burden or is it an opportunity, right? That makes all the difference in how you approach it, how you internally sell it up into the organization, how the stakeholder engagement occurs throughout the process. Maybe touch a little bit around the mindset of your first report?
Leigh Anne Bishop: I can speak a little bit to that because the other thing is that I've seen clients say, “Oh, well, such and such aggregator or ranking, rating agency called. And we got a hideous rating. So, we have to fix this and we have to fix this right now.” And I think that the point is you can't really worry about that. You can respond to it and online reporting makes it easier to respond to it because you have an evergreen site.
So you can log in and say, “Okay, we've crafted this. Or we've chosen not to disclose this because of X, Y, and Z.” And, and maybe you can explain your side and, you know, “he who frames the argument, wins the argument,” if this was an argument. But I think that it's important in terms of those rating agencies looking for data and trying to define those motivating factors, you want to be as accessible and as transparent as you can. And you're trying to please everyone, which is a challenge when you're talking about internal stakeholders and shareholders, and all of these ratings and rankers out there. But I think that you have to define your story and you have to tell your story before someone else does. And before someone else tries to frame it for you.
Jennifer Sadenwater: Because they will, they're seeking the data, they will report. And if you don't jump in and put your stake in the ground and say, “This is us. This is our story. This is what we strive for. These are our aspirations,” The wrong story will be told as well, and companies need to know who's out there, and who to contact if perhaps maybe their industry is classified wrong. If someone's rating them against, which isn't their business, it's not going to reflect well. So they need to just stay on top of that and have open community and constant communication, too, with those rating agencies.
Leigh Anne Bishop: And I think that's why it's so important to try and make a plan. You know what I mean? You can get your first report out there for the sake of getting it out there. If you truly have a deadline and proxy season is in play and all of these other crazy things affect you. Sure, that's okay. But I don't think that you let that define your strategy going forward. And you need to sit down and think it through, and it helps to talk to folks like you or talk to folks like Jonathan. I mean, Jonathan, you’re always talking about branding and you don't control your brand. I can't remember the exact turn of phrase that you use.
Jonathan Fisher: You can’t control your brand. You can only manage your brand. So a lot of things are out of control in the marketplace.
Leigh Anne Bishop: That's right. And I think that applies to ESG. Don't you? I mean, to a certain extent, it's like you can't control everything. So you just have to do you and be as responsive as you can.
Jonathan Fisher: And I think Jennifer, you know, she hit on it. This is a huge opportunity. That's why I asked the question of burden versus opportunity. How do you attack this process? How do you control the story, set your story? And this is relevant data that will, when managed – to Katherine's point – is part of the business strategy and it exists there already. And so this is exciting, and you should want to do this information because it puts you in the driver's seat with all of these stakeholders. And to your point, Leigh Anne, what you'd expose now and tomorrow or never, that puts you in the control for managing that messaging, as you decide to distribute it and when and where and how you decide to distribute it. And to me, that's really exciting about this process.
Leigh Anne Bishop: And I think it makes you stronger, you know?
Are There Other Frameworks to Consider?
Katherin Warren: I want to go back to your comment on opportunities, because another framework that we like to use is the task force on climate-related financial disclosures or TCFD, that's often put hand in hand with SASB. And when you look at the disclosures that are recommended from TCFD, they always refer to the risks and opportunities related to climate change, right? And so there's often a sense of dread, like we're going to have to talk about emissions or how we pollute in our air quality, and we're an energy company and people think we're the bad guys. There's opportunity too, because you may be selling equipment that aids in containment or it helps keep fugitive emissions out of the oil field. Or for instance, we had a customer that sells PPE to the offshore wind industry.
So that’s an opportunity as the wind industry becomes more of a player in the overall generation portfolio, all over the world, they're going to grow, they're going to need PPE. You sell that. So there's an opportunity. So that's related, and that is renewable energy. It's a puzzle that can be solved in the storytelling. And that's real, so the opportunity is often lost in the dust when you first think about this, but it's such an important part of it and such an upside, because now you're thinking about what share of the revenue is now PPE that's going to the wind industry?
Public vs. Private: What are the Reporting Differences?
Jonathan Fisher: Talk about public versus private for a moment. And some of the values that are maybe a little different between the two, because I think this is a great segue. The differences between a publicly-traded company and a private company wanting to do this. What are some of the pros and cons there for them in that regard?
Katherine Warren: So the opportunity with a private company is you're going to be going out, looking for more investors, right? And also for a private company, you might be hoping that you're going to be identified as an investment for people who are looking to invest in ESG or something green or energy transition. So you want to be part of the scope of that investment portfolio. The access to capital, whether you're private or public. Jennifer, you should speak more on the public cause that's your previous domain too, right?
The Importance of Reporting Before Going Public
Jennifer Sadenwater: Yeah, so we've also done pre IPO clients that have been thinking of going public and felt that having an ESG story would give them a little bit of an advantage and possible investors may be seeking that information to know, “Hey, is this, is this someone we want to invest in?” And that was a fun one to do. But also I think it was Leigh Anne that said making a plan on your report and thinking about the opportunities and what Katherine was saying about PPE to offshore winds, it enables you to think out of the box of your typical, maybe what your products that you're offering are, and think of ways you can enhance your reports through different product offerings as well. And also when thinking of the entire plan, considering the age of your ESG data and timing of your other financial data and integrating it together. Because ESG and financial performance go hand in hand to tell the big picture of the entire story of the company.
How Can ESG Raise Your Valuation?
Jonathan Fisher: I think about the value to the company itself, the perceived value of the business can be elevated, right? If you have a strong ESG plan in place, because if you're talking about mitigating risk and liabilities and things like that, you're protecting the company. Therefore, the company may be perceived as more valuable to an investor or to a buyer in that process. And the other thing that comes to mind that we see is what I call the trickle up, right? So a lot of these big publicly traded companies, you may be a service provider or a component in their supply and logistics chains and your credits, or the things that you're doing will then transfer up into their ESG report and impact their processes. Right? You can make them look better and help them. And so by disclosing it as a private company, that maybe doing business with other public companies, there's an advantage to kind of slot into their current processes and their mindsets and their data.
Leigh Anne Bishop: There are so many different things to unpack there because a good ESG strategy is really a good business strategy. It's almost like they should be synonymous or the same thing. And an annual report should be an ESG report. They should walk hand in hand together. So there's that element to it. But then Jonathan, to your point, there are so many different companies that we've seen that discover a whole new line of business through this process and uncovering what they're good at, what their strengths are, what their clients are investing in and what their clients need and providing those services or those products to them. It just makes you smarter and it makes you a little bit more perceptive of your offerings and really in a sensible, realistic, manageable way.
It's not fluff that the C-suite is talking about. It's something that the guys, the boots on the ground are making a difference.
Katherine Warren: I think it also can uncover high potential employees too, and pockets of brilliance in your company because it has to be signed off and owned by the executive highest level. And often you are going to have one of the topics that are really important to the ESG report is owned and nurtured and loved by somebody in the company who might not have high visibility straight to that top. So it uncovers the capability of the organization down to the personnel level that you might not have known. And that's a great benefit as well.
Jonathan Fisher: Well, HR has got a big stake in this, right?
Leigh Anne Bishop: Yeah. And Jonathan, I know that one of your areas of specialty is internal communications. And in terms of managing from, let's say a board of director level to the CEO, who's kind of hired to walk this walk, right? Not just talk this talk and all the way down through the company, because even if the board blesses an ESG strategy or says, “yes, this is a great report.” If it's not implemented throughout the organization, it's a falsehood. And you're not really doing yourself any service, but if you can couple that in part of your good governance or social, or your targets, your metrics, it's really integrating that messaging internally and communicating it to every level of an organization. Then you've got something. Then you're really on your way. Don't you think?
Jonathan Fisher: I totally agree. And I think a key thing to keep in mind, if you're thinking about your first report and all this is how the messages are going to transition down through an organization and across through an organization. Because we see the classic mistake is we put a report out there and we told everybody to go look at it or go read it. The cook in the kitchen isn't going to do. So you have to think about these sort of manager talking kits and points that get communicated for different audiences communicated up to the board, right? You may have board members that need media training around this, that need talking points around this.
Out of your 40 pages or whatever it is, what's the most relevant for them to go back to or hit on or how to address a question if they don't fully understand the data? So I think the report is just the tip of the iceberg in this process that you want to think about when you get into this situation. It’s not just how do I get my data together and how do I put it out there? But it's, how do I address it once I start collecting it and best distribute it and talk about it, and then future map it, which you guys, Katherine, are so good at. Talking about not just today, but tomorrow. What's tomorrow’s plan?
Katherine Warren: Well, when you're talking about engagement, when people are saying, what does COVID mean for ESG? Or how does ESG measure the COVID resilience of a company? And part of it is how engaged is your workforce, right? There are some sets of ESG standards where employee engagement is measured with different ways. Sometimes it's qualitative, but there's different quantitative [measurements] such as length of employment or turnover rate. So what you're talking about is rather than just having back in the olden days, when there'd be a binder on the shelf, right? So your ESG report is not a binder on the shelf. If your company has already strong employee engagement, which is a factor in S, the social part, then it should be naturally already integrated into your day-to-day culture. So that is kind of circular.
Leigh Anne Bishop: And the mission, vision, values, all of that goes hand in hand with it, right?
Timing and Distribution of an Inaugural Report
Jonathan Fisher: Should these companies be prepared to, while they're thinking about the report structure and mechanism, is there a concurrent track where they ought to be thinking about the distribution?
Leigh Anne Bishop: Yeah, because the report doesn't stop the day you publish it. That's a horrible way of thinking about it. “Well, we're done. We put the PDF on the website. It's all over kids.” I mean, it's just beginning, right? Now you have that dialogue and you should be having a dialogue, not a monologue, but that's when it starts to get interesting. And when you can really go year-over-year saying, “Okay, here's where we started. We've changed our tune. We want to do something different.” Or “This affected us this way, this year.” That's where you really start the potential, the opportunity to make real progress, not only for your own employees and your company, but to make the world around you a little bit better, and your clients a little bit stronger, a little bit better. That's where it starts to get really fun for me.
Katherine Warren: But you want to show progress, right? So year one, year two. So it can't be a once a year thing because you're not going to show progress.
Jennifer Sadenwater: And I think it's important too, in terms of the media that you're using to publish it, having it out there on your site. When we talked earlier about the people entering the workforce, now they do research on the companies they go work for. So having that data there and available to read on your website is important. It needs to be accessible and not buried somewhere.
Leigh Anne Bishop: They really want all of those values. And not only just as an employee, but as an investor.
Online vs. PDF Reports
Jonathan Fisher: You touched on publishing just now, Leigh Anne. Maybe talk a little bit about the online report versus just the PDF solutions that can be digital or even an offline printed product. What options exist out there and what are some of the differences between those options and why you might want to consider a full evergreen digital report versus just your PDF report?
Leigh Anne Bishop: Well, I think that the online report is a findable report and granted, people will find the PDF if you're out there promoting it on LinkedIn or other social channels. If you've got some, a little bit of PR behind it and press releases, there's nothing wrong with that at all. And we see tons of companies do that. But I think that for as vast as this ecosystem is growing, you have the reporting frameworks, you have the ratings and rankers and aggregators out there. You have all different types of stakeholders, employees, the public. It makes sense and it's actually sustainable. I always say that sustainability reports should in and of themselves be sustainable and accessible. So when you talk about ADA conformance, WCAG conformance, you want to make it as accessible as possible.
I think that from that standpoint alone, you lean towards online reporting. And then there are SEO tools that you can leverage. There's title tags and meta descriptions. There's XML sitemaps that you can upload to Google to kind of give Google a headstart in helping find you. There are a variety of different things that you can do. And then if you don't want to be found, or if you want to have gated content, then you can do that too. If you want to speak to a certain institutional shareholder you can have it password protected. So you control -- again, we're going back to the whole concept of branding and messaging and mission, vision, values -- but at the end of the day, you're helping tell your story your way.
And I think that that's the best way because you know it better than anybody. And as long as you have something substantive to say, it all works out in the end. And the online reporting is just another asset, another arrow in your quiver. I'm trying to think if there's anything else that I would do different, and I don't think there is. Obviously for those ratings and rankers out there that if they need quick access to your performance data, you can make a PDF so they can download it. You can use all of those different assets that you've created online digitally for social sharing and telling your story and having conversations out there and leverage those things for reports other than ESG reports. So it's just a wide variety of tools that you get when you kind of take that mindset and say, “Nope, I'm going to be present, you know, and present online.”
Jonathan Fisher: When the report's fully online from a user experience standpoint, you can send somebody to an exact page or image or graphic. When the report's encapsulated in a PDF, you can send them to the PDF, but then they've got to go do the work to drill into the product itself. So from a user experience, they want the best of both worlds because you can do online and still give them the option to download. But I think it's important to consider with all these different stakeholders and all the ways they can access it from their phone, from their computer, from their tablet, right? In a meeting, in an event as a handout, you want to be prepared to allow for all the channels to work effectively, right? Don't put the burden on the individual.
Leigh Anne Bishop: Because that's a barrier to entry, right? If I can't see the PDF on my phone, am I really going to zoom and try to get to the data? No, I'm just going to say, “All right, well, that's not going to work. I need to find some other resource, you know?” And an online report is a responsive report. The way they're built today, all websites, all good websites are accessible. All good websites are responsive. I'm thinking responsive in terms of whatever device that you're on, but there's also just the responsiveness to different entities that are out there. And that may call up and say, “You know what? We didn't find any data on this. Or we wanted to know X, Y, and Z, or we're about to give you a no score instead of a yes, score here or here.” You can be literally responsive and log on to your site. And if you've got an argument or a statement that you want to make to it, you can update your report. It's evergreen and we see clients do that all the time. And they need to because again, it's a dialogue, right?
Jonathan Fisher: I think a fear of online publishing is that you'd have to get IT involved. And it's a big process to publish a website when it's actually not. When you have a product that can stand up your website for an ESG report and you yourself don't need to be technical to go edit or manage it or change it. It's really WYSIWYG. Click and upload the thing you want to do.
Leigh Anne Bishop: If I can do it, anybody can do it. You know what I'm saying? But no, that's absolutely true. And there are a lot of different platforms out there. We have our own with ESG Artisan. But I just think that it's important, whatever device, whatever CMS you're using, you need to use it all the time. You can't just do it once a year. And that's the nice thing about being online and getting into platforms like ours, for example, where you can be responsive and be engaged. And it's something that you can keep up to date. You can tether to your IR section or your IR section can tether to you as needed for different quarterly earnings and different reports that you want to put out there. So it should become an integral part of your publications and your conversations with your investors.
Jennifer Sadenwater: I think it's important, to what you were saying, that it's evergreen and editable. You know, some companies may not want to wait annually to publish this type of data, especially if they have certain initiatives that they've rolled out and they're proud to really get it out there. Let's say they had a big hiring push for diversity and inclusion, and they want everyone to know, and they don't want to wait eight months down the line to report on something they just did. They could do it real-time.
Data Timing: When Is It Best To Publish a Report?
Leigh Anne Bishop: So I always talk about data too. There's one thing that we can come back to print versus online, which I'll get to in a minute, which is cost. And it used to be cost-prohibitive. It's not anymore really. I mean, they're pretty comparable. But talking about data and timeliness of data. What's the disadvantage of producing a report and having it at the end of the year with data from the previous year versus other things? I think that that's important in terms of your first report. You need to be as current as your competition or as investors need it to be right? And there's typically a season. Can you guys talk a little bit about that and kind of the overarching reporting season?
Jennifer Sadenwater: Ideally you would want your ESG data to come out no later than six, maybe eight months after year-end. I mean, everyone is tight, it's new to some companies. And so a lot of people are busy within that January, February, March timeframe getting the 10Ks and everything out. But a lot of this can go hand-in-hand as you're collecting that type of data. So sometimes they'll issue their 10K, then they start to collect the ESG data. But really after June and beyond it's getting to be a little bit stale.
What Are Pros and Cons to Doing an Inaugural Multi-Year Report?
Jonathan Fisher: Is there an advantage or disadvantage to doing a multi-year report for your first report? Do you see people wanting to come out with comparison data, say it's going into 2021, I'm going to do my 2021 inaugural report. How far back in time would I be going back or thinking about going back? Would I want to show 2018, 2019 and 2020? Or do I just want to start with 2020 as my raw baseline? Is there a discussion that's happening in the market right now with your clients regarding that?
Jennifer Sadenwater: No one that we've encountered has wanted in their very first report to publish let's say 2019 and 2018, because a lot of it, like when we were talking about using the reporting process to tell your story, things are coming to light, you know, in that year one. And so they can build upon that going in the future, but it's sometimes hard. I mean, I don't want to say it's hard to collect the data in year one, because like we’ve said, we generally start with data that's already collected. But in terms of really knowing what the benchmarks are and what peers are doing and everything going back in time of what you did before, I think it's good to start in year one and build on it for the future. And you can speak to what future plans are as long as you have the intent and following through with that.
Katherine Warren: There's also a challenge that, especially since we, we do a lot of work in the energy industry and there's so much activity around inorganic growth or buying new assets or mergers and acquisitions, sometimes in order to make it a comparable data set, you're not starting out at the basic level. You're going to have to normalize the data and make sure that you can really explain the data, which makes it more complex. And so one of the things that we like to tell people for their inaugural report is you really want to keep it as simple as possible for your first year. If you have a history where you're going to have to explain, “Oh, we added this plant, or then we rolled off this company,” you know, if it's going to be more complicated to get some data out, then that kind of flies in the face of simplicity.
But then there are some metrics that are already publicly being reported. Like if they run safety like TRI or information that you're submitting to something like OSHA. So that might be something where you could do a few years back again. We really put the discipline of financial reporting into the report. And so you really would have to explain in footnotes, year 2018 included this division, but not that division, et cetera, et cetera. Which you can do, but you just need to be aware that you're wading into that complexity level.
Jonathan Fisher: I'm glad you answered it that way, because I'm thinking in my mind for somebody that's listening to this, are they thinking they have to go back more than one year in year one, right? And the theme that keeps coming up here is that less is sometimes a little more in year one. You can scale it. Don't be afraid. Don't be worried. You probably have the data already. And so, I think it's good to kind of throw these questions out there so that we can say, no, don't worry about that. Or no, you don't need to deal with that in that process. But also you want to think about these things, right? Think about the various stakeholders, think about the business objectives and think about the communications. And it's not one and done to Leigh Anne’s point in this process. And so I think as you sort of set yourself up for this first report, this is the lens by which you want to be thinking about attacking this process.
How Do You Get Buy-In For a Report?
Leigh Anne Bishop: Yeah, how do you convince someone? How do you convince the CEO or a CFO or the board of directors? There's so much stuff out there, right, that you could use to frame your argument and proof points for your argument. What do you guys recommend when people are trying to manage upward within their organization to say, no, no, this is really important that we do it this way – and here's why?
Katherine Warren: Well we want the report to be owned by the company, so we can make a recommendation, but since we're in kind of this ambiguous time where it's not mandatory, there's no right or wrong. You can go back and ask some of your investors. If the IR department knows of conversations they've had, that's certainly part of the case. I like to say, look at your customers, right? So if you have customers where they are saying, “Here's our scope one, here's our scope two, we're setting these targets, we expect supplier diversity.” All these different statements that they're publicly putting out there. It seems short-sighted to not think that that's no longer a competitive advantage, it's table stakes, right? Yeah. So I would look at the commercial reason behind it. And also you can involve the sales division in that as well. If there’s a reason to go talk to a customer, it might be,” Hey, look at, we're starting to track scope, too, what do you think that?”
You don't want to push somebody to a decision because it needs to be owned. The buy-in needs to be at the top. So you shouldn't try to make something so big and bold that it's this big campaign to get he or she to buy into it. But I would look at the customers. You want to talk to the investors. And then of course you can always go to the competitors and see what they're doing. That's always a good place to see what's going on, but you get dangerous there. You don't want to keep up with the Joneses. You don't want to be, “Oh, look at their 200 page PDF report.” It’s very compelling and it's shiny and all that, but that doesn't mean that you need to do that. But it's still a data point. We like to look at that as well.
Jonathan Fisher: It's like you say, it's really an opportunity to talk to sales, talk to customers that shouldn't be the burden of the process. So back to that kind of conversation we've had before it coming back around again, you make an excellent point.
Katherine Warren: Talk to the contracting department, right? Are you getting these huge complex RFPs where it's no longer, do you have a sustainability report? Check. Now it's going to expect that to get more complex. So that would be another place for evidence where it makes a business case for it. And you're feeling, this is taking it away from even the argument of it's the right thing to do, right? So do you want to do good? Do you want to be a company that people aspire to and admire and your brand is authentic and people want to work for you? You can even just put that to the side and just say the crass commercial reason can be found too.
Jonathan Fisher: You know, what we want is a win-win, right? This shouldn't be a reporting burden. This shouldn't be purely a financial decision process. This should have impacts that extend through the entire organization, because going back to all those early stakeholders, everybody should win in this process when you do it right. When you start off the right way, when you have a good strategy that is built through it and managed. And then expand it, you know, you know, year two, three, and four, as you start to think about where you want to be down the road and how you're going to improve and what you're going to report on. So that's a huge opportunity with this process that exists both for public and private.
Jennifer Sadenwater: If you find an area where, “Hey, wait, we didn't do so good here. We're gonna make improvements. We've identified it. And we're going to make a change that goes a long way, a really long way.” There's nothing wrong with saying not everything has to be a hundred percent perfect. We analyzed this, we realize we have room for improvement. Here's what we're going to do for the future to make change.
Jonathan Fisher: The worst thing you can do is try to hide something or cover something up. The blowback on that is so much bigger and larger.
Leigh Anne Bishop: Yeah. The cover-up is worse than the crime, right? It's what you tell your kids. “I know what you did. Just admit it.”
Jonathan Fisher: Do this process now. And don't wait. You can uncover where those gaps are and you may not choose to report on those gaps, which you brought up earlier, Jennifer. You can be working on those gaps, but when you do go to report on those gaps in year two or three, whatever it might be, those numbers are even more favorable in that process.
Inaugural Report Success Factors
Jonathan Fisher: So I think it would be great, given what we've talked about today, if you're listening to this and you're thinking about your first-time report, if each of us could give them a couple of points to really reinforce what we've talked about so far. If you took nothing else away, these two things, this one thing, what would you like to leave as an indelible impression in somebody's mind?
Jennifer Sadenwater: Don't wait, get your story out there.
Leigh Anne Bishop: Don't be afraid.
Katherine Warren: Get buy-in across a couple of functions so that you're already seeding the soil at the company for this to be a company-wide commitment.
Leigh Anne Bishop: Don't go it alone. There's strength in numbers.
Jonathan Fisher: Well I think that people think that this is going to be a narrow initiative. That they'll only be talking to two or three stakeholders in this process. And I think the thing that I can always stress is that people will get excited that you're suddenly doing it and they'll see value in what you're doing and they'll want to be part of it. So be prepared for your little community and your ecosystem to get larger as you get into this. I think that always surprises first-time report people.
Leigh Anne Bishop: Yeah. It's like that manager wasn't ever engaged and now all of the sudden he's all over it, which is actually a good thing because if they get excited about it and they see opportunities there, they may come at it with something that you never thought of. So there's strength in that thought leadership and sharing that with others.
Katherine Warren: And tactical things, call around to all those rating agencies and find out what your score is. If you can't find it, because you're going to be surprised you might be classified in a different sector. They're making assumptions. There might be one little piece of information that you can answer on the telephone and you raise your rating there. So go out there and don't just be reactive, find out what people are thinking about you even if you don't have a report yet.
Leigh Anne Bishop: And I think they want to talk to you. I think they're very open, the folks that we've met at SASB or at TCFD.
Jonathan Fisher: I'd say don't be afraid to not keep up with the Joneses in this regard. Pick and choose your battles in this process. Don't feel overwhelmed to report and do everything just because somebody else has been doing it for a year or two or a couple of years in this process. So be selective, be mindful, be smart and make sure it's business strategy as well, which has come up multiple, multiple times in this process. ESG is business strategy and business strategy is ESG.
A Few Extra Insights
If you need a little help as you consider a rebrand, we're happy to chat. If you think your company is ready for a transformation, read some of our clients’ own rebrand stories to see how they experienced the process.
Here are a few more tips to help:
- Find out how ESG reporting can support your brand.
- Learn how investing in ESG reporting builds brand integrity.
- Discover why ESG reporting matters and if it's right for your brand.