August 09 2022 at 10:00PM
Aug 2022 | Perspective: The Current Landscape of Sustainability and ESG Disclosures
In July, the PMI-SFBAC Sustainability group hosted a presentation by Connor Cash, The Current Landscape of Sustainability and ESG Disclosures. Connor Cash has studied the industries that lead in sustainable innovation, the trends, and how companies report on sustainability metrics: Environmental, Social, and Governance (ESG). His research uncovered that companies are facing extensive barriers to ESG reporting. He is now on a mission to close the gap and facilitate accurate disclosures of environmental, social, and corporate governance data. To accomplish this, Cash set out to develop Caesar Sustainability, an ESG data collection, and management platform.
What is sustainability? “Simply put, sustainability is a business approach to creating long-term value by taking into consideration how a given organization operates in the ecological, social, and economic environments. Sustainability is built on the assumption that developing such strategies fosters company longevity” (Haanaes & Olynec, 2022). ESG disclosures allow transparency within the company and its stakeholders. They also assist investors in making better business decisions on environmental, social, and governmental practices to prevent financial risks.
Sustainability and accurate disclosures are becoming increasingly more important. Customers are demanding more sustainable products and are willing to pay a premium for them. Employees are vocalizing their desire to work for socially responsible organizations and are taking a pay cut to make it happen. These indicators have raised awareness, and companies are taking action. In the last few years, we have seen an uptick in ESG discussions in earnings calls, and according to CaesarSustainability.com, 95% of the S&P 500 report on ESG.
ESG reporting is still new, and companies are trying to figure out how to navigate its landscape. One obstacle is the sheer number of ESG frameworks available to choose from. Since there is no single global standard to follow, many companies use numerous ESG frameworks. There are also multiple governing bodies and, at the same time, no guidance on what companies should disclose. In the United States, the Securities and Exchange Commission (SEC) is the principal regulator of the public markets. But, companies that also do business in Europe must adhere to the EU Commission’s stringent regulations. Creating coherent reporting standards with buy-in from the governing bodies can alleviate these obstacles. Working together to simplify the landscape will be the key to the future of successful ESG reporting.
Perhaps, the biggest challenge companies face today is the data management component required to create ESG disclosures. Data can be hard to capture, calculate, and quantify. ESG data is also often divided across the business where it is stored in various locations and managed by different people/roles. Compiling the data can be tremendously time-consuming and costly. One solution is to develop tools that streamline the data management process, such as Caesar Sustainability. Caesar focuses on high-level data aggregation and aims to bring all relevant data under a central repository. Tools like Caesar will enable companies to reduce data bottlenecks and improve their reporting process.
Connor Cash's presentation was very insightful and inspired me to learn more about this topic. Although sustainability is only starting to gain momentum, it is our job to keep it at the forefront. I can now imagine a world where organizations are connected and working together to make our planet better than how we found it. We must all do our part to create a greener future for our little ones to thrive in.
Enterprise ESG Data Solution. (n.d.). Retrieved July 24, 2022, from https://www.caesarsustainability.com/
Haanaes, K., & Olynec, N. (2022, May 9). Why all businesses must embrace sustainability in 2022. IMD Business School. Retrieved July 24, 2022, from https://www.imd.org/research-knowledge/articles/why-all-businesses-should-embrace-sustainability/#:~:text=Simply%20put%2C%20sustainability%20is%20a,such%20strategies%20fosters%20company%20longevity
Lizette is an accomplished PMO leader in the Silicon Valley with experience in delivering calculated directions for the consummation of technical projects and program initiatives.