Part 6: Duties to the Environment
84 What challenges exist in ESG reporting?
ESG reporting may be useful for comparing companies, but lacks uniformity, precision, and widespread adoption.
ESG reporting represents an attempt to bring ESG issues into investment and other decisions. Yet as currently practiced, it suffers from a number of problems. These include:
- There is no uniform standard for reporting. GSI and SASB represent only two of the options that attempt to report ESG-related data in some form. Without uniform reporting, comparability is difficult between companies.
- Reporting has not been universally adopted. Because ESG reporting is largely voluntary, many companies do not perform reporting. This is particularly true for small companies, for whom the costs involved in creating standardized ESG reports may be prohibitive.
- ESG reporting lacks precision. While some factors may be precisely quantified, such as the percentage of suppliers following some type of environmental practice, many types of relevant environmental effects may be extremely difficult to quantify.
Exercises
- Compare one of the GRI and SASB reports linked to in the prior Question. What are examples of how the reports are comparable, or not?
