ESG Reporting – A five-minute explainer (Part One)

With many hospitality and foodservice companies setting their own environmental targets and publicly starting to implement changes to improve the sustainability of their business, ESG reporting is a hot topic.?

What exactly is ESG reporting and what does it mean for you? Grab a coffee and have a read of the first part of our ESG explainer, as Laura Kirwan PhD , Sustainability Lead at Nutritics, gives us the lowdown.

So, what is ESG reporting and how will it impact my business??

An ESG report provides an overview of a company’s performance and activities related to environmental, social and governance issues. Through the disclosure of key data, an ESG report aims to provide stakeholders with a transparent picture of the business’ impact in these areas.?

In recent years, as we’ve all become more conscious of our environmental and social responsibilities, increasing importance has been placed on ESG reporting. Customers, stakeholders and investors now expect ESG to be embedded in a company’s annual reporting and for businesses to be transparent and take responsibility for their ESG credentials. In fact, when making investment or purchasing decisions, environmental and social responsibility is a key priority.?

Therefore, it’s vitally important that businesses prioritise ESG reporting. Companies who are unable to demonstrate their commitment to these issues, or who are not seen to be transparent about their impact, could face significant financial and reputational issues.?

Is ESG reporting mandatory for UK businesses??

Although the UK is yet to introduce mandatory ESG reporting requirements, major developments in climate reporting have been observed over the past year and environmental legislation is expected to be introduced in the coming years.?

In the UK, the Department of Environment, Food & Rural Affairs consulted on improved reporting of food waste by large food businesses in England in 2022.?

In addition, the Principles for Responsible Investment (PRI) published a briefing paper comparing similarities and differences across climate-related disclosures using Task Force on Climate-related Financial Disclosures (TCFD) recommendations and guidance as a comparative baseline*. Legislative changes and investor and customer demands are therefore driving expectations for evidence-based climate action.

OK – so which data should I be monitoring and reporting??

When it comes to identifying data sets for ESG reporting, it is important to evaluate any current data structures and frameworks that are already implemented across your business. The availability of data over time on procurement, supply chain, products, outputs and elements such as employee travel and energy bills can provide a concrete basis for estimating emissions and identifying trends and changes over time.?

When it comes to ESG reporting, a lack of an international standardised framework means it’s about choosing which framework is most relevant to your business. However, when deciding what data to disclose, it is important that companies are transparent and logical in their process of data selection, integration and all calculations used across the business, in order to ensure that reporting outputs are clear. To ensure credibility, companies must align the content of their ESG report with their values, mission and purpose and those of investors and stakeholders. Furthermore, it’s important to focus on areas against which your business can set a realistic benchmark, and against which you are able to track and measure progress over time. The ability to demonstrate to key stakeholders that you have a robust strategy and a strong dedication to improving will not only potentially benefit financial performance, but pave the way to investor confidence and customer loyalty.?

In the hospitality and foodservice (HaFS) sector, reducing carbon emissions and water footprints have been key focus areas. Menu management systems can be used as an evidence base onto which environmental data points can be layered, providing concrete estimates for a baseline that can progress over time. In addition, these systems can also identify areas for improvement across your supply chain, allowing businesses to understand where they need to invest to help reduce their environmental impact.??

Sounds like a big job – how can businesses start to tackle this??

ESG reporting is certainly a complex landscape. As climate action and investor pressure has increased, so has the need to find the expertise to help develop a company’s ESG strategy and to analyse, develop and track their progress.?

However, the challenge faced by many companies is finding the talent to help them do this, while confronting a huge sustainability skills gap. Consultants can provide leadership and structure on an ad-hoc basis, but may not be within the budget for a number of companies, and while initiatives such as the United Nations Climate Ambition Accelerator programme offer educational materials and structured workshops and assignments, the time and resources required to complete the courses can come at a cost for businesses. Furthermore, new regulations mean companies are facing a dynamic regulatory landscape with limited support frameworks.?

There’s no quick-fix solution to these problems, but there are some important steps businesses can start taking such as, implementing better knowledge and data sharing frameworks and investing in upskilling workforces on their sustainability knowledge and skills.?

In the hospitality and foodservice sector, new educational services and content can provide a solution in raising the baseline knowledge of employees and executives. As well as this, it improves the confidence of a business in maintaining compliance with new regulations and in answering questions from customers and clients, as well as internally from management.?

You can read about the tools available to help ESG reporting, as well as the benefits of voluntary ESG reporting, in Part Two. ??

If you want to find out how Nutritics and Foodprint can help you to measure the environmental impact of your menu, you can contact the team on [email protected] or visit https://www.nutritics.com/en/food/carbon-footprint-scoring.??

* PRI, Principles for Responsible Investment. Briefing Paper. Draft Climate Disclosure Rules and Standards; A Comparative Analysis. 2022.