What is ESG data? How to use ESG data?
概要
You may have heard that investors care about ESG data. But do you know why?
What is ESG data?
"E", "S", and "G" in ESG data represent Environmental (environmental), Social (society), and Governance (governance) respectively. Also known as the three key components companies will use to determine the environmental efficiency and sustainability of their collaborations.
Measuring and reporting ESG data is a way for companies to build transparency, trust and accountability into their environmental goals so they can attract future investors, employees and customers.
What is ESG data good for?
ESG is integral to achieving all of a company's environmental, social and governance objectives.
First, sharing ESG datasets can help businesses grow by building trust with governments for future funding, which in turn creates new business opportunities.
Through high-quality ESG data, the growth brought about by government funding can eventually create some opportunities for income. This means that recording and sharing ESG data will create new avenues for any company interested in growing its business.
ESG data are also very important in their own right, as they can improve employee experience and productivity. Reputable ESG data will enable companies to recruit and retain motivated employees and also better communicate the company's business mission. Therefore, ESG data providers can also cooperate with ESG investors to help stakeholders make investment decisions.
What are ESG scores?
An ESG score is a measure of how well a company is doing across all components of ESG data, including economic, social and governance factors.
What is an ESG report?
ESG reporting is when a company shares its ESG scores and data with other investors, potential business partners, employees and customers, with the aim of increasing transparency and promoting the sustainable development of the company.
ESG reporting has many benefits. For example, investors often use ESG reports to determine whether a company is doing enough to reduce its carbon footprint, and whether there is benefit in investing in a company with a good ESG score.
If a company decides to calculate and clarify its carbon footprint through its ESG data, it will make an important contribution to mitigating the world's climate change - as it provides detailed data on how to reduce its carbon footprint and how the company can go about looking for an environmentally friendly approach.
Below, we break down the various components of ESG reporting.
What are the components of an ESG report?
1. Environment
The "E" in the ESG report refers to the company's environmental energy use: including carbon emissions, energy conservation, animal handling, water use, etc.
A company's ESG data will be calculated by the energy it uses and its overall positive or negative impact on the environment. If investors do not perceive the company to be environmentally active, they are more likely to choose to invest in a company that is doing more to reduce its own carbon footprint.
- society
The "S" in ESG reporting refers to a company's social interactions, and how they increase or decrease their carbon footprint throughout their social interactions.
The "S" in a company's ESG score can be calculated based on many factors: such as diversity, inclusion, employee contributions, job expectations, gender equality and customer satisfaction.
In the ESG score, the "S" is essential in the overall calculation, because a company cannot function properly without being social.
- governance
The "G" in an ESG report refers to a company's "governance." In other words, how all business activities are managed and executed. This is also known as governance data.
For example, a company could calculate this ESG information based on the number of current or potential conflicts within it.
The content of this part of the report can provide a reference for investors whether to invest in a company. In addition, this unstructured data can help rating agencies determine whether companies meet regulatory requirements, such as regulatory reporting, providing balance sheets where necessary, and complying with EU taxonomy.
5 steps to get your ESG data right
If you have already started to reduce your carbon footprint but do not understand the step-by-step process of calculating and defining ESG, read below to learn how to reduce your carbon footprint calculation.
- strategy
The first step to successful ESG reporting is developing a strategy.
You should think deeply to achieve a higher overall ESG score based on company characteristics, such as using your company's products or goals in your ESG.
As an example, if you run a vegan restaurant, then instead of talking about how much electricity you use, talk about how much less water is used for cooking because of cooking plants, and how this ultimately reduces your carbon footprint.
- method
The second thing to consider is the method you use.
Are your current plans to reduce your carbon footprint well executed, or is it time for a plan B? Constantly assessing the success of your current actions to reduce your carbon footprint is an integral part of a company's ESG score. Don't be afraid to think or try new ways to benefit your company and the environment.
- implement
Then there's how to translate your values into actions to reduce your carbon footprint.
The components of calculating an ESG score should not be seen as a project, but rather as an attempt to fuse the value and defining characteristics of an ESG score with your product. This will show investors not only persistent effort and creativity, but also your strong determination to reduce your carbon footprint.
- share
Next is the resulting ESG score you are willing to share.
If your company has already calculated an ESG score, please don't hesitate to share your score. The key to success is your willingness to maintain your current score and, more importantly, share your calculations with others.
- guarantee
The final step to success in ESG reporting is committing to focusing on current or potential issues.
Collecting large amounts of data can mean that there can be a lot of problems. Therefore, it is very important to recognize potential problems in advance - because this will show investors that you are committed to protecting the environment.
Committing to making sure your ESG data calculations are accurate and up-to-date will demonstrate a company's passion for reducing its carbon footprint. All in all, if you are looking for a way to share with others (such as future investors) how you are reducing your carbon footprint, measuring and reporting your ESG data is the best way to achieve your company's environmental and financial goals.
Article source: Greenly
