A common disclosure and reporting language is bound to improve your interactions.
What is your ESG reporting level today, and what about tomorrow?
by Paul Pierroz
Strategy | Sustainability | Marketing
October 5, 2021 - Public disclosure can be the subject of healthy debate. Leaders have strong views about the information they place in the public domain. Creating a straightforward way to think about and discuss disclosure can add efficiency to the board and management. A simple method uses a numeric disclosure level. The concept is that each additional level represents a more expansive public disclosure. A designation can quickly express your current status, the status of benchmark organizations, and your forward-looking plans.
A forward-looking plan can also form part of your sustainability strategy. You can list the areas you disclose today, describe your disclosure, assign a level, and then indicate the level you expect to achieve over the next three years. You may determine you are at level four, for example, and will likely remain there over the planning period, or you will increase or decrease it over the period.
Let’s look at the six disclosure levels below:
1. No disclosure
2. Intent only
3. Intent and practice or policy
4. Intent and practice or policy and metric
5. Intent and practice or policy, metric, and target
6. Intent and practice or policy, metric, and certified target
Non-disclosure is level 1. It indicates that either you do not have the information or that you have it available and have decided not to disclose it. Intent only, which is level 2, typically includes a general statement of principle acknowledging that you take an area seriously, actively monitor your performance, and commit to upholding standards in the area.
If you have an operating practice or policy, alongside your intent, it will rise to a level 3. An example of this would be a documented business conduct policy together with a stated purpose to manage your organization and activities to a high standard and comply with applicable laws and regulations in the countries in which you operate. The code would continue to move higher with metrics, aspirational targets, and certifications. The highest, level 6, indicates that you disclose a metric and a target accompanied by third-party verification.
A well-thought-out design with a few common standards can keep the board and management aligned for the journey ahead.