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4 Takeaways From Reuters’ Sustainable Finance & Reporting Europe 2021

Northampton, MA –News Direct– Workiva

The drumbeat of ESG-related news is gaining momentum. The recent announcement by the International Sustainability Standards Board (ISSB) is the latest accelerator in a long line of measures to improve ESG reporting. More news is good news: the shift towards standardization, comparability and greater trust will benefit companies, their investors and the wider global community.

However, it also increases the pressure on organizations. They know that regulators, standards committees and investors are raising their expectations. They also know that change is coming, and they need to be prepared for it. But without crystal-clear clarity about what these expectations and changes are, it’s difficult to make decisions that make the most sense for their business and its stakeholders.

All the noise around ESG rises to a crescendo in anticipation of the next move. Between the opacities, moments of clarity reassure businesses and enable them to act. Reuters Sustainable Finance & Reporting Europe 2021, with a focus on transparency and enabling action, was one such moment.

Andie Wood, Workiva’s VP Regulatory Strategy, spoke at the event with the head of ESG at one of Europe’s largest investor firms and a leader in ESG corporate reporting. Together, they discussed the shift towards greater control, comparability and navigating the complexities of stakeholder expectations, and offered advice to help organizations pave their own way forward. Here are four key points from the session:

1. Find long-term solutions for immediate needs

There is no such thing as an “easy win” with ESG reporting. While there are signs that some elements of the reporting process will be simplified (by providing consistent global standards, for example, the ISSB will significantly reduce cross-framework mapping), the scope of the task is still huge. That is why it is important to keep the big picture in mind at all times.

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During the conversation, Andie cautioned to focus on solving isolated issues within the reporting process. “The temptation is great to look for a solution to tackle the first painful thing that really stands out. One of the problems with that is that it doesn’t think about the whole process. And it doesn’t necessarily mean the company has a more flexible solution for the longer term. I think a lot will change.”

Further change is almost inevitable. Organizations know they need to think beyond existing and proposed ESG mandates. They need technology that enables them to anchor trust and help them future-proof their environment.

2. Make ESG data fully accessible

A lot of effort is put into collecting ESG data from an organization to tell the story, which should be easily accessible. While it appears that the Corporate Sustainability Reporting Directive (CSRD) will enforce the use of Inline XBRL® for sustainability data – which should make the information contained in reports machine-readable and easier to find – the panel’s recommendation is not to leave everything buried in a pdf.

Investors use AI to scrape websites for ESG data to inform their ongoing strategies. If this data isn’t visible or can’t be pulled from a web page, a company’s ESG efforts can easily go unnoticed or, worse, be wiped out. Share your results loud and proud – put them on your website.

3. Promote an agile environment

Creating an ESG report is undeniably complex, and the seemingly amorphous expectations of internal and external stakeholders contribute to this complexity. An investor at the event explained how his company will require every company in its portfolio – including small and privately held companies that are otherwise unaffected by certain mandates – to report on their scope 1, 2 and 3 carbon emissions. Other investors may have similar or completely different requirements.

From the perspective of someone working on the report, it is critical to maintain a dialogue with key investors. A panelist shared how his company takes inspiration from all the different reporting frameworks, including those of the Sustainability Accounting Standards Board (SASB) and the Global Reporting Initiative (GRI), and combines this with their robust materiality process. Having this structure helps steer the conversation with investors and ensures that their perspectives are understood.

This approach works for one company: other companies know what they need to build stronger investor relationships and meet their demands, while complying with regulations and standards. Whatever the approach, it must be backed by agility.

Andie continued on the topic during the event: “Organizations need a certain amount of agility to be able to flip through the boxes instead of just thinking, ‘You’re going to fill this all in and then you’ll be miraculously similar’. .. because we know that just doesn’t work, it doesn’t provide the correct material data.

“I think it will be very important – both in terms of the standards and the tools that companies use – to maintain their flexibility, because otherwise companies cannot differentiate themselves. They can’t tell that story. They cannot explain why they are leaders in their sector. Someone from the outside can’t look at them and figure out what it is about the company that makes them that little bit extra special.”

4. Focus on developing strong materiality assessment practices

Due to the ever-changing nature of ESG reporting, it is becoming more difficult to conduct materiality assessments. The predictability of when these assessments should be performed is yielding less and less returns. It is no longer possible to wait until a specific time of the year to assess what matters to stakeholders – this insight needs to be tapped more regularly to keep up with the rapid pace of change and maintain relevance.

It is understandably difficult to develop a new perspective and approach to materiality assessment and the processes surrounding it. But for many, this would prevent a lot of pain. Andie explains: “Once companies have gotten into a situation where they feel comfortable – perhaps they have spent a lot of time building a materiality matrix and have identified the key material areas to be concerned about internally and externally. make – that there’s a bit of a reluctance to want to adapt or change that. They’ve put a lot of work into getting that stable. Changing it has a lot of downstream effects. It affects the data that needs to be collected. It affects which information ends up in internal reports versus external reports.

“But if that downstream process isn’t robust after the materiality decisions are made, then it can make companies a little scared to work on things upstream. Likewise, they may not be able to make decisions as freely as they would otherwise like.”

We’ve put together a guide to establishing robust materiality assessment practices. Check it out here.

XBRL™ and Inline XBRL® are trademarks of XBRL International, Inc. All rights reserved. The XBRL™/® standards are openly and freely licensed through the XBRL International License Agreement. Our use of these trademarks is authorized by XBRL International in accordance with the XBRL International Trademark Policy.

See additional multimedia and more ESG stories from Workiva at 3blmedia.com

Check out the source version at newsdirect.com: https://newsdirect.com/news/navigating-esg-expectations-4-takeaways-from-reuters-sustainable-finance-and-reporting-europe-2021-799202657

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