For over a decade, our team has been working with corporations in many industries from retail and manufacturing to mining and oil & gas in enabling them to report on their sustainability progress. We help them disclose their progress and assess risks with granular environmental, social and governance (ESG) data collection, analysis, disclosure and reporting tools. It’s safe to say that we’ve seen many different scenarios play out with some of our clients. 

Our key takeaway? There is no one-case-fits-all approach to implementing a long-term ESG strategy, as companies will have different sustainability goals and indicators based on their industry, location, framework and level of maturity.

The members of our team have collectively helped hundreds of organizations in Europe, the United States and Canada turn their ESG data into an efficient, long-term sustainability reporting system. In most of these cases, the sustainability teams decided on Metrio as their ESG reporting software to overcome the hurdles that they were facing with their manual reporting processes and the common hiccups of managing a large amount of data.

When it comes down to brass tacks, a sustainability reporting platform is not much different for a large organization than an Enterprise Resource Planning (ERP) software. While the sustainability leader in the organization will be responsible for overseeing the system, it must act as a single source of all truth across all departments, sites and even, in certain cases, the wider supply chain of the company.  

It’s a solution to a simple, but universal problem that all organizations face: How do I leverage my data to get visibility across the company and all of our business processes?

ESG disclosure goes beyond your company’s financials, although there are a lot of common areas, and dives deep into key metrics related to your non-financials.

To help you in your sustainability reporting journey, I sat down with some of our in-house experts to get their first-hand advice on how you can overcome the biggest ESG reporting challenges.

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Here are 3 tips from our team that will help you avoid some common reporting pitfalls:

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1. Start small, and start early.

Properly reporting on your company’s ESG performance takes time and resources: Time to plan out your ESG reporting strategy; time to set up complex data entry forms; time to collect and approve primary data; time to analyze and structure your sustainability information according to specific reporting standards and frameworks; and finally, time to put together a shareable report.

Miléna Aragon is an ESG data analyst at Metrio. She has set up several reporting systems for large companies and helped them with risk management. From what she’s seen, one of the mistakes that many companies make is trying to go too big, too soon.

It’s tempting for corporations in the early maturity stages of their non-financial reporting to want to rapidly tackle the whirlwind of frameworks, rankers, raters and regulations. You might hear reference to “the alphabet soup” of sustainability disclosure, with dozens of ESG standards and indices available. 

It’s a commendable instinct that generally arises from the ambition to “do ESG right”. The issue there is that due to the high-volume and complexity of data, your team might be biting off more than they can chew - so to speak.

To start small and ensure you’re setting up your team and company for success, we recommend adapting the Sustainability Accounting Standards Board (SASB) standards as a starting point.

An environmentally and socially responsible company with a well-established reporting process might have about a dozen ESG metrics for each of the main topics in its public report, or about 20 to 40 metrics in total. However, if your company is earlier in its reporting maturity, your team would be better off with less KPIs with higher granularity and traceability. If that’s the case for your team and you’re going into your second year of reporting, as Miléna suggests, focus on quality over quantity. 

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"What are quality KPIs in ESG reporting?"

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What are quality KPIs in ESG reporting? The key factors to consider when it comes to quality should be how much impact it drives towards your company’s sustainability progress, whether the data is granular and traceable, and whether your information has been verified and approved. Each of these elements will serve to make your data more impactful and investor-grade.

Businesses that aren’t adept at reporting on their sustainability performance should start with an internal report that includes only the handful of performance indicators that they have the most substantial amount of data on. These key indicators should highlight your company’s ESG issues that need the most improvement.

Your team should start this whole process well before your reporting period - at least 6 months on average - to give your team enough time to iron out the kinks in your process and validate your information.

By reducing the number of KPIs you need to measure, your sustainability team can focus on finding quality data instead of worrying about secondary indicators. In the meantime, you can still put aside information from other sources and analyze it during next year’s reporting cycle. 

Your public reports should reflect an in-depth assessment of your performance and your indicators must be relevant to your biggest ESG risks when it comes to yearly progress. The more ambitious you are before you’ve had a chance to iron out your data collection processes and properly choose your indicators, the less confident your team will be when it comes time to share that information with your public stakeholders. 

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2. Get your whole company on board.

As a Software-as-a-Service (SaaS) company, we learn a lot from the businesses that use our software. Bryan Zimmerman, one of our project managers, works closely with those companies’ sustainability professionals to help them set up their reporting processes.

According to him, one of the most common challenges ESG professionals face is getting their entire organization to adopt a new reporting process and platform. In other words, they need internal buy-in.

He believes that one of the best ways to get people on board with a new system is to involve them in the whole setup, testing and training process. Let them know well in advance that you’ll be using new ESG reporting tools, and keep them in the loop as your software is implemented. 

As I mentioned earlier, businesses need to think of their sustainability data and progress in the same way that they would think about their other core business processes, and track them in the same way that they would their finances in an ERP. Granular data and cohesive data, across all departments, is the best backbone that your sustainability team can have going into reporting season. 

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"The greatest challenges in ESG reporting come down to data collection & setting up regular flows."

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As Bryan aptly points out, the most successful organizations when it comes to ESG reporting, have senior executive buy-in when it comes to their sustainability plan. The most mature sustainability departments our team works with will often tie their sustainability initiatives with their corporate objectives and compensation, receiving less resistance internally and ensuring that all of their departments are well-aligned on the importance of the data required. 

The internal buy-in phase will usually happen before businesses start to communicate their sustainability data publicly, oftentimes with a CEO letter and mission statement to the entire organization.

The greatest challenges in ESG reporting come down to data collection and setting up regular flows. Each department has a critical role to play in the process and it can often become a time consuming process to consolidate folders, spreadsheets, PDFs and other formatted quantitative and qualitative data into a single source of all truth.

Our clients combat this in two ways that can be applied to any company:

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• Find your internal ESG champions - these are key roles in each department that are interested, engaged and able to focus on helping you gather the information that you need. They will be your greatest assets. This is as true for businesses preparing their first report as it is for enterprise-level corporations that are years into disclosure and public reporting.
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• Manage expectations. There is no one-size-fits-all approach to sustainability reporting. When you’re implementing an ESG reporting platform, such as Metrio, to track and manage your data, you have to account for a lengthy set-up that will require collaboration throughout your organization. This is true of any data management system (again, think of an ERP), but especially impactful when it comes down to making sure you’re getting the right footing for the next phases of your reporting journey. Implicate your department champions from the get-go and plan for platform set-up, testing, dedicated team training sessions and clear deadlines and instructions for data collection processes.

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If you’re able to apply these two lessons-learned to your organization, it will streamline your entire reporting cycle. 

3. Back your statements with facts.

Marie Rougier is a Business Development Representative at Metrio. She has a bachelor’s degree in Management from McGill University and specializes in impact management.

As part of her role, Marie regularly talks to professionals from different businesses and industries. She has her ear to the ground and is closely attuned to the latest developments in sustainability. 

One of the things she’s noticed is that many first-time reporters fall into the trap of putting together a sustainability brochure before their larger sustainability report. These brochures are typically well-designed and contain a lot of general statements about the companies’ sustainability commitments, but they’re usually lean on hard facts and numbers. 

One-pagers and high level overviews are perfectly fine, and even recommended for simplifying and sharing information with the public. However, your one-pager or brochure should generally be accompanied by a larger and more detailed report that serves as its foundation.

Marie warns that making empty or embellished claims can bring companies dangerously close to “greenwashing”, a practice which can negatively affect their reputation with serious investors and the public.

In your larger and more detailed sustainability report, stick to clear, realistic and measurable targets to garner respect and confidence. Essentially, don’t tell your readers how great your achievements are: let your data speak for itself.

Read our 4 key recommendations for improving your sustainability reporting for more helpful tips on how to overcome key challenges. We address double materiality assessments, data sources, and choosing your ESG reporting solutions.