Unlocking ESG Trends: Key Takeaways from ESG Learning Lab Workshops

"Sustainability disclosure is not just about checking the box and meeting investors' needs or regulatory requirements-it's about driving strategy, risk management, and ultimately performance," said Neil Stewart, Director of Corporate Outreach at the IFRS Foundation, at a ESG Learning Lab workshop. The half-day event brought ESG experts, Workiva customers, and other practitioners together to discuss sustainability reporting.

Attendees and panelists examined key global trends shaping the future of corporate sustainability practices, including new regulations, requirements for materiality and double materiality assessments, and the revolutionary role of technology in reporting.

Keep reading for takeaways and how you can incorporate these practices into your own ESG strategy.

ESG reporting is here to stay-voluntary or not

Regulatory shifts and increasing stakeholder expectations have transformed global reporting, creating urgency for business leaders to prioritize their companies' ESG performance. According to our research, 89% of companies that responded now prioritize ESG reporting more than before.

The benefits are clear. The same data demonstrated that 84% of respondents agreed that integrating financial and ESG data-which is required for many regulations, current and proposed-enables better decision-making and enhances a company's financial performance. Additionally, 88% of respondents believe that integrated reporting positively affects a company's long-term value creation.

"There's an opportunity for companies to incorporate sustainability into business strategy, select the right key performance indicators, and track the return on investment of sustainability metrics," said Tensie Whelan, Founding Director at NYU Stern Center for Sustainable Business and part of Workiva's ESG Advisory Council.

Emerging ESG regulations

Attendees and experts discussed the patchwork of sustainability regulations, including:

• California SB-253: Requires large companies doing business in California to disclose their Scope 1, 2, and 3 greenhouse gas emissions, with independently verified reports housed on a public digital registry
• California SB-261: Requires disclosure of climate-related financial risks for companies that do business in California with at least $500 million in revenue
• The SEC climate disclosure rule: Would eventually mandate public companies to provide standardized climate-related disclosures in their annual reports and registration statements
• The European Union Corporate Sustainability Reporting Directive (CSRD): Requires companies to report on their ESG performance using the European Sustainability Reporting Standards (ESRS)
• The European Union Corporate Sustainability Due Diligence Directive (CSDDD): Will mandate companies to identify, mitigate, and report on the impacts of their operations and supply chains on human rights and the environment
• ISSB Standards: To date more than 20 jurisdictions have decided to use or are taking steps to introduce ISSB Standards in their legal or regulatory frameworks

As regulations evolve, available frameworks won't be far behind. For example, GRI or SASB standards aid compliance with mandatory reporting requirements and indicate a high-level of transparency. According to Neil, the ISSB has developed standards for a global baseline of high-quality sustainability disclosure, building upon existing frameworks like TCFD or standards like SASB. "Investors have been calling for TCFD and SASB disclosure, and now they're asking for the ISSB," he said. "It's the next evolution of investor-grade disclosure."

Meanwhile, organizations are following efforts to consolidate frameworks and standards worldwide.

Building ESG reporting from the ground up

Creating an ESG reporting process from scratch may seem daunting, but it is a critical step toward sustainable business practices. Contributors advised on how to move forward with these six stages:

1. Align material ESG issues to your company's purpose

Establishing explicit, attainable goals that are aligned with the company's strategic direction and stakeholder expectations is crucial for success. It not only helps to drive positive ESG outcomes but also enhances the company's reputation and credibility among its stakeholders. "We're not just reporting to report. We're reporting because we believe there's a business value," said Mark Mellen, ESG Industry Principal at Workiva.

2. Assess and define material ESG issues

Sessions addressed materiality, double materiality, and the importance of conducting materiality assessments, which help companies identify and prioritize sustainability issues that matter most to their business. With a thorough materiality assessment, companies can allocate resources efficiently, enhance the credibility of their ESG disclosures, and align their sustainability strategies with stakeholder expectations.

3. Get stakeholder buy-in

Internal and external stakeholder buy-in is crucial for companies, private or public. Internally, employees, management, and board members must understand and support the company's ESG goals and data collection processes. Externally, effective communication with investors, customers, regulators, and the public is essential for building trust and transparency.

Engage with stakeholders to gather insights and perspectives on ESG priorities to enhance the relevance and focus on the reporting process. "Who are some key stakeholders you can bring in to talk about why this is important?" said Mark. "Bring in those stakeholders and have an informal conversation with leadership so they can hear firsthand about the business implications."

4. Create a documented ESG reporting process

To do the work, teams need fluid workflows to collect, interpret, and issue error-free financial and non-financial data. Experts urged attendees to rethink their data management operations and automate repetitive tasks with cloud reporting platforms and generative AI. With better data, organizations can more accurately vet their performance against predetermined goals and industry benchmarks, and make more accurate and meaningful sustainable reporting contributions and responsible business practices.

5. Build in controls

Experts also recommended a resilient controls framework built across financial and sustainability reporting. To achieve this, organizations are progressively adopting technology to flatten silos and create cohesion among various reporting workspaces to ensure metrics are precise and audit-ready.

Even if you feel good about your data, there is always room for improvement. "When we have our report in the Workiva platform, it allows us to create controls to monitor accuracy and consistency of the data," said a VP of ESG reporting at an American bank.

6. Evaluate your technology

Organizations are progressively implementing ESG reporting solutions and other data management tools to enhance accountability, clarity, and accuracy. However, ESG reporting practices vary among companies. Some are still working with disparate and fragmented systems, potentially risking accuracy. Collecting ESG data, which isn't always available in traditional ERP systems, through traditional methods may also not meet assurance needs for modern regulations.

"We realized tech could help our team add control and assurance, and also help save our time. We recognized our work is not a two-person undertaking, so we started looking for a solution," said a customer at a publicly held insurance company.

The growing demand for ESG reporting

The layered insights shared among experts, customers, and participants led to an ultimate conclusion: the growing demand for ESG reporting highlights the significance of taking action toward reaching sustainable business goals today.

Otherwise, reputational damage can cast a long shadow in the market. Truth isn't just in the numbers anymore-it is now in all the data. By prioritizing progress, companies can meet stakeholder demands, set new benchmarks, and pave the way for a sustainable future.

Are you ready to talk about the future of your reporting? Get in contact with an expert today.

2024 ESG Practitioner Survey

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