Critics of the current state of ESG, the anti ESG movement, has pundits piling on to label ESG as a buzzword for greenwashing, a woke political agenda, a distraction from achieving true sustainability in society, or not doing enough to move the needle on impact. At the other end of the spectrum are companies arguing that the reporting requirements are too complex or time consuming, not useful for their investors, or they don’t have the necessary information to disclose. While there is validity on both sides, these arguments both point in essence to the shortcomings of the current state of ESG, rather than its promise to transform. Given that ESG and ESG accounting is relatively in its infancy it’s important to look ahead to consider how these issues will be addressed through the evolution of ESG.
ESG is still evolving
The ESG ecosystem is still very much in its infancy, and we should expect growing pains as the field matures in terms of definitions, methodologies, standards, etc. Over the past decade, there’s been a proliferation of frameworks, standards, and rating systems related to ESG categories. Some are category focused, primarily the environmental sector, while others are geared towards specific industries. The recent formation of the International Sustainability Standards Board (ISSB) promises to bring more clarity to this ecosystem with a global baseline of sustainability disclosures to meet capital market needs, akin to financial accounting standards and with it, more clarity for companies wanting to track their ESG performance against a relevant set of metrics.
Given the complexity of this landscape, one of the most common concerns that we hear from mid-market companies as reporting regulations and expectations trickle down to this segment, is that setting up ESG program is too difficult (how do I start with ESG?) and that it’s not worth the effort or money to capture the data (what is my current ESG performance?) let alone focus on improvement and external reporting. The good news is that while starting your ESG program from the ground up that requires multiple stakeholder input can seem daunting at first, but when done correctly it can actually promote growth and reduce cost.
ESG is becoming increasingly mandatory
Despite concerns and shortcomings, ESG is not going away. Even in just the last two years, we’ve seen strong momentum by government entities to improve ESG guidelines. As these regulations go into effect, it will further solidify ESG as a license to doing business in the future.
Navigating ESG of the future requires being proactive now
ESG will impact how business is conducted in the future, and the best way to prepare is to develop proactive ESG strategy today rather than wait and be blindsided by potential hurdles to requirements. More than just a reporting checklist, companies must approach ESG as a core strategic challenge, not only to help future-proof their organizations but to deliver meaningful impact over the long term. ESG is a journey, and as the ecosystem continues to evolve with framework consolidations and guideline updates, it’s important to pick a platform that can adapt to regulatory changes and support you throughout this journey. Good.Lab’s ESG performance management software is optimized for companies to kickstart their ESG journey, benchmark current progress, and identify gaps that may become future risks.
What’s next in your ESG journey
Good.Lab is helping companies to simplify ESG program development by breaking it into easy to execute steps. Our ESG taxonomy is compatible with many of the widely adopted standards in the industry to create a comprehensive ESG roadmap that can drive value creation for your company. Our software helps companies to benchmark and track progress for a future that prioritizes ESG concerns alongside shareholder returns. When ESG is done right, it can unlock new opportunities and reduce risk, such as getting head of industry trends or improve employee retention. If you’re interested in exploring how ESG can be a meaningful part of your company’s growth, let’s talk!
Disclaimer: Good.Lab does not provide tax, legal, or accounting advice through this website. Our goal is to provide timely, research-informed material prepared by subject-matter experts and is for informational purposes only. All external references are linked directly in the text to trusted third-party sources.
Ready to talk ESG?
Connect with our ESG experts today!
From ESG program development to ESG target setting, data management and reporting, our team of ESG experts can help you fast-track building a world-class ESG program.
CPA.com and Good.Lab Announce Program to Accelerate Accounting Firms’ Growth in ESG Advisory Services
CPA.com, the business and technology subsidiary of the AICPA, and Good.Lab, a leading provider of environmental, social and governance (ESG) software and consulting services, today announced a new ESG practice development program that will enable accounting firms to respond to growing client demand for ESG advisory services. The program launched with an initial cohort of […]
From our inception, we envisioned a company that stands for more than just profit. This vision led us to becoming a certified B Corp and pledging our commitment to “1% for the Planet” – a global alliance of businesses that contribute 1% of their sales towards environmental endeavors. Our partnership with 1%, which started on […]