While regulations vary across countries, pressure from stakeholders, particularly investors, for broader and more easily measurable disclosure is increasing. More than 96 percent of the S&P 500 and around 81 percent of the Russell 1000 are issuing ESG reports, according to the G&A Institute – an impressive increase from 70 percent in 2020 for the Russell 1000.
Many non-public companies issuing public debt have also opted to take this route in the interest of best practice communications. So while disclosure requirements and sustainability reporting will clearly increase as regulations evolve, so will the scope and size of sustainability reports, despite the debates around SEC disclosure rules on greenhouse gas emissions and the recent pushback on ESG regulations that are regularly making headlines.
And whether a report is 20 pages or 120 pages, a thoughtful and creative strategy will ensure your company’s sustainability content is communicated with clarity and impact, enabling your audience to review, process and evaluate these increased volumes of information more quickly and efficiently.
Collecting and analyzing ESG data, not to mention drafting and producing the actual report, takes an enormous amount of time, resources and investment, financial and otherwise. It’s therefore exceedingly important that releasing the final report isn’t the end of the road until the process begins again next year – neither for your sustainability head nor for the IR team. IROs have many opportunities throughout the year to engage with investors and stakeholders, which also provide an opportunity to leverage the considerable effort that goes into producing your annual sustainability report.
Tip 1: Create an ESG summary
Don’t expect everyone to read everything, particularly if your sustainability report is more than 100 pages long, as many tend to be. Summarize your content into a well-designed three-to-five-page summary that you’ll include as the key highlights within the press release you issue announcing your 2023 sustainability report. Press releases can provide stakeholders with an outline of the key takeaways from the report, including new initiatives or updates on progress related to ESG goals.
A three-to-five-page summary encapsulating your key messages can be further leveraged within a downloadable factsheet that also serves as an IR teaser to get investors interested in your strategy and in the sustainability report itself. This serves as your accessible and user-friendly ESG introduction to all stakeholders.
Tip 2: Expand the summary into an ESG presentation, updated quarterly
Your investor presentation summarizes corporate highlights, messaging and key financial information: why not do the same with your ESG initiatives and metrics? A sustainability presentation shares a high-level overview of related initiatives, performance and goals, updated quarterly to reflect progress, changes or any new developments. Use the ESG presentation and factsheet to complement your sustainability report and provide investors with a more targeted and concise summary of the company’s ESG performance. These can also be easily accessed and downloaded via your IR website or shared via QR code at non-deal roadshows, meetings and investor days.
Converting the sustainability report into a sustainability presentation that’s then shared with the broader investment community is an extremely efficient and effective way to leverage the most salient points. Companies with a specific three-to-five-year strategic plan can develop an ESG strategy presentation and publish regular updates with achievements vis-à-vis goal plans using the presentation as a reference that is then revised once a new strategic program is put into place.
Tip 3: Hold ESG-specific external meetings to showcase sustainability report content
Hosting an ESG webinar is a great opportunity to inform your internal and external stakeholders and highlight your company’s dedication to sustainability and ESG initiatives. You can also consider organizing an ESG day to introduce investors to key members of your team and demonstrate your company’s strategic commitment to long-term sustainability and progress toward improving ESG performance over time. For most larger funds, fund managers who focus on ESG indicators are often distinct from the analysts and portfolio managers who interact regularly with IR teams and attend investor days. This is an opportunity to engage with all relevant investor stakeholders.
Whether you choose to showcase your company’s sustainability achievements and plans for the future during an ESG day, or even as part of your regular investor day, it can help align your company with potential investors that share your values and priorities.
Tip 4: Hold ESG-specific internal meetings to showcase your report’s content
An internal meeting with all employees is an excellent opportunity to showcase your report and the company’s ESG achievements during the year. Getting your internal stakeholders on board with your ESG strategy and key achievements as well as goals is extremely motivational to ensure they feel part of the process – not just part of the sustainability report but, more importantly, also part of the sustainability strategy itself – and thus begin to incorporate ESG into their day-to-day activities.
Launch the sustainability report internally with a company-wide ESG day or a ‘town hall’ meeting. You can leverage this opportunity to show your employees the value of their contributions, explain the sustainability story behind the data and KPIs and open the floor for questions and feedback. It’s also important to demonstrate what the information provided by them was used for. You might be surprised by how this can drive proactivity and improve efficiency for your next reporting cycle.
Tip 5: Incorporate thematic content within your website’s ESG section
Further leverage your sustainability report by extracting specific sections and including them within the ESG section of your website. You can incorporate a specific downloadable document on diversity, equity & inclusion or path to net-zero, for example, and summarize it on the site. The current trend among European companies is to provide PDFs related to various relevant ESG topics on websites. This can be developed after the report is finished and be a streamlined version or deeper dive into the original content. These topic-specific extracts provide opportunities for updates without having to wait 12 months for the next sustainability report.
Tip 6: Periodically update the annual sustainability report
Updating key areas of information that are not dependent on year-end audits and then referencing that information in the sustainability report eases the timing pressure in the first few months of the year as teams scramble to publish with year-end financial reporting. This also helps reduce the size of the final report.
Tip 7: Repurpose content in social media/ESG digital campaigns
Create snippets that highlight key data and distribute them through your social media channels. Videos serve as an excellent tool to involve C-suite executives who can provide context to the data. Alternatively, you may want to create an ESG newsletter to share regular updates on your ESG initiatives and progress. Using your sustainability report as a foundation for these activities ensures that all ESG-related communications are consistent and aligned with your overall ESG strategy.
Ultimately, it’s the IRO’s job to maintain an active and trust-based relationship with the investment community. You can differentiate your company’s sustainability journey by creating multiple ways to leverage this considerable investment and ensure your stakeholders consume the specific information that is relevant to them, updated on a timely basis and available in multiple convenient formats.
Zelmira Silva, partner at InspIR Group, leads the firm’s ESG advisory practice