From Indicator to Impact (through active ESG management)
We are in high season of EINFs (non-financial reporting statements), integrated reports and sustainability reports.
In many cases, the people responsible for them persecute their colleagues in search of the number, the data for the report, with a rigorous delivery date because then it has to be verified, and in many cases this is the end of the year's financial year.
In some cases, approval by the board of directors of the integrated report will be lacking, a procedure that in many cases is still that, a mere procedure, because it is not the part of the report that is discussed in greater depth. Some of this information may be transferred to communication (internal or external) to nourish a memory of sustainability whose first objective is usually to make it clear.
It is true that more and more companies already know that the EINF matters, that their investors are going to analyze it, that ESG ratings and benchmarks they are going to search for and use the information and, therefore, it begins to interest them. That is why we need to know how we can carry out a active ESG management, is very relevant for the company.
But... And if?
What if the EINF had a storyline linking social and environmental impact with a company's business?
What if, in addition to including a few SDG logos, you delved into indicators and measures relevant to your sector and valued the company's contribution to the 2030 agenda?
What if the EINF were the last step in a strategic exercise to consider material aspects as part of the management of the company?
What parameters need to be measured?
What if instead of going our separate ways, we used all the same parameters to measure common issues? As the major references of business impact in the world explain, such as George Serafeim, Sir Ronald Cohen, Colin Mayer or Clara Barby in her article Measuring Purpose — An Integrated Framework, it would be useful to identify the parameters that companies need to measure to activate their purpose. For example:
- Inputs: financial, human, social, natural and physical resources that a company uses to carry out its activity.
- Outputs: measuring what a company produces.
- Results: the changes generated by the activities of a company.
- Impacts: the effects on the well-being of others generated by that company on customers, employees, suppliers, societies and the environment.
But this type of non-financial information isn't the only thing or the last thing we can do. There is one more step, which is to monetize these metrics.
And why is monetizing key? Because these valuations make it possible to allocate resources and investments. In the context of the purpose, it is necessary to assign a value to the natural, social and human capital used to achieve that purpose. But beware, there is a risk of not valuing anything that is priceless and, therefore, of not dedicating investments to critical issues that no one has evaluated.
From Transcendent We have been doing the management of non-financial parameters a competitive advantage for our clients, improving their results and their position before their stakeholders.
Are you interested?
Feel free to contact us at gestionactivaESG@transcendent.es if you are interested in knowing more information about the ESG management. Find out what else we can help you with! Transcendent!
