The devil is in the ESG detail: How confidence in ESG reporting is rooted in transparency and authentic detail
As we go on our transformation journey, we have a clear purpose: to build A Better Tomorrow by reducing the health impact of our business. If a company is committed to transformation, as we are, we need more than heart-warming stories to evidence this commitment and change.
Without a single approach to measuring ESG impact, and with investors demanding clarity on how companies like ours are delivering on our ESG commitments, comprehensive ESG reporting is key to demonstrating how corporates can be a good investment, doing good for all stakeholders.
Transparent, detailed and balanced reporting, demonstrating solid progress against strong ambition and clear targets is a key tool to build trust. Despite trends towards shorter, punchier corporate reports, this streamlined style of reporting won’t deliver the detail expected by investors. Reporting CSR achievements is not sufficient. Any company today must prove its contribution to combatting the world’s biggest challenges, such as climate change, human rights and biodiversity, and demonstrate delivery on its corporate purpose through credible facts and figures.
The challenge is including the good and the bad. This isn’t new - it’s been a key principle of reporting standards and frameworks for over 20 years, but it’s something companies are still uncomfortable with.
At BAT, we have a strong track record in proving how we are delivering against our ESG priorities and it is extremely rewarding to be recognised as a global leader in ESG reporting. We have been listed in leading ESG indices such as Dow Jones Sustainability Index (DJSI) and Refinitiv which prioritise transparent reporting and we were presented with the ‘Openness and Honesty’ award in the latest Corporate Register Reporting Awards. Our track record ensures our business is sustainable in the long term and sets the strong foundations of our ESG reporting.
However, transparency should not be limited to reporting. It is important that a business is open about its progress – and challenges - throughout the year and across the company. Regular communications bringing the ESG journey to life will transport everyone on your journey. Storytelling through social media channels, website and internal comms is not only the opportunity to convey your achievements but it will also instil trust in your commitments amongst a broader set of stakeholders. At BAT it is important that we are transparent around our products and some of the barriers we face. For example, last year we launched Vape Explained.com -- a digital information hub providing adult smokers and vapers with factual answers to questions commonly searched for online.
In a climate increasingly sceptical of corporates and greenwashing, transparency alone is not enough to build trust. Third party validation is an important tool to provide assurance to stakeholders on the accuracy and materiality of what is reported. This is why for twenty years we have submitted our data for external audit. Beyond assurance for stakeholders, external audit provides valuable feedback on how we can continually improve our approach. Listening is crucial to understanding and addressing stakeholder needs and expectations. And this doesn’t have to be complicated. BAT uses well-established international standards such as IIRC, GRI and TCFD to guide its ESG disclosures. We also transparently publish our scores in the leading investor indices such as DJSI, Sustainalytics and Vigeo Eiris. These reporting frameworks can be time-consuming, but companies should regard them as friends, not foes. Our regular engagement with diverse stakeholders enhances our reporting and through these networks we can prove our ESG strategy is rooted in a forensic understanding of our global ESG impacts. We have taken this one step further to strengthen trust in our Company’s commitments and for the past four years we have invited an Independent Stakeholder Panel to review the materiality of BAT’s ESG reporting. All in all, this transparent, third-party assured reporting of progress in ESG is testament to our commitment to accelerate the transformation of our company.
So how can sustainability professionals steer the business in the right direction? Amongst other things, we have to sustain an external perspective, bringing insights from our networks. It is about making our companies aware of this changing environment and putting the challenge in perspective, offering solutions such as the external frameworks which will support a company in making this change in reporting and communications. We have a responsibility to lift the corporate narrative away from simple inputs and outputs to one where it can demonstrate real impact. Above all, as sustainability professionals we must offer guidance and reassurance that telling the whole story, including the difficult angles, is absolutely the right way to go.Jennie Galbraith - Group Head of ESG