Scale Your ESG Reporting Efforts as Your Organisation Grows

Start simple and evolve: begin with a basic framework and scale your ESG reporting efforts as your organisation grows

In today's business landscape, environmental, social, and governance (ESG) reporting is becoming a crucial aspect of corporate responsibility. While large organisations may have entire departments dedicated to ESG initiatives, smaller players, especially those with limited budgets, often find getting started challenging. Smaller players should ask two fundamental questions at the start:

1. What is ESG reporting? 

2. What does ESG mean to us, and where to start? 

The World Wealth Report 2024 highlights the fast-evolving nature of ESG considerations and underscores the importance of leveraging behavioral data to effectively meet compliance and reporting requirements while tailoring solutions to unique stakeholder needs. This approach is especially relevant for companies with limited resources, which can benefit from utilising automated tools for data collection and insights. 

With Liliya's experience working with small clients, this article aims to introduce smaller players with key ways to approach the beginning of the ESG journey. We know for fact that there are cost-effective ways to establish an ESG reporting framework without draining resources, both in terms of money- and time-spent.

1. Prioritise material issues

A fundamental principle of ESG reporting is thinking about the materiality aspect and conducting the materiality assessment — focusing on the issues that are most relevant to your business and its stakeholders. For smaller companies, this means identifying areas where they can have the greatest impact and where investors or customers will expect transparency.

Rather than attempting to cover every aspect of ESG, concentrate on the specific factors that are important to your industry and stakeholders. For example:

• A manufacturing company might focus on reducing carbon emissions and waste management.
  
  
• A service-based firm might prioritise workplace diversity and data privacy. 

Smaller companies often have a closer relationship with their stakeholders, including employees, customers, and investors. Use this to your advantage by engaging stakeholders early in the ESG reporting processes. Their inputs can also help prioritising which ESG issues to focus on, and their support will be crucial in making sure ESG initiatives are embedded into your company culture. Surveys, meetings, or informal conversations can provide valuable insights into what matters most to your stakeholders, helping you shape a more focused and meaningful ESG report.

By narrowing the focus to what truly matters, smaller organisations can avoid being overwhelmed and allocate resources more effectively.

2. Start small and scale over time

To start your ESG (Environmental, Social, and Governance) journey, it's important to keep things simple initially, focusing on the core aspects of sustainability that are most relevant to your organisation and stakeholders. By taking a phased approach, you can expand and enhance your ESG reporting as your company grows and the regulatory environment evolves.

Starting with simple but scalable solutions, like leveraging low-cost ESG reporting tools, allows smaller players to engage meaningfully with sustainability and demonstrate leadership without overwhelming their limited resources.

The MiFID II sustainability amendments offer an insightful framework for this. These amendments integrate ESG factors into financial advisory services, emphasising a step-by-step approach where firms first collect and assess client sustainability preferences before diving into more complex requirements. 

Similarly, for ESG reporting, begin by identifying what is most material to your stakeholders, then gradually build your ESG framework from this foundation. 

The European Securities and Markets Authority (ESMA) also provides a useful example of an evolving approach. ESMA will assess how well firms are integrating these requirements through initiatives like the Common Supervisory Action (CSA), emphasising the importance of starting simple but scaling effectively to meet compliance as expectations increase.

By starting with a simple framework—much like how ESMA's actions guide incremental compliance—and evolving over time, organisations can navigate the complex regulatory environment efficiently while positioning themselves as responsible and proactive participants in the sustainable future.

3. Leverage affordable ESG reporting solutions

There are ESG reporting tools and resources that are low-cost and high value-add, making them accessible even to companies with smaller budgets. Such platforms offer frameworks that are scalable to different types of organisations. For budget-conscious companies, these tools can simplify the reporting processes of for instance ESG, SFDR and Taxonomy, well designed for smaller players, integrating financial and sustainability data collection into one streamlined and automated process, which as a result becomes a cost-effective and time-effective solution.

As a conclusion, for smaller businesses with limited budgets, getting started with ESG reporting doesn't have to be overwhelming. By focusing on material issues, leveraging affordable tools, and starting with a simple framework, even resource-constrained organisations can begin their ESG journey. As your business grows and evolves, so can your ESG reporting, paving the way for a more sustainable and responsible future.

Prioritise reporting on areas that are most relevant to your business and stakeholders, avoiding a "one-size-fits-all" approach. Begin with a basic framework and scale your ESG reporting efforts as your organisation grows and utilise affordable automated ESG tools and templates to streamline data collection and reporting.

For further information:

Helena Nabseth
Chief Marketing Officer, Sharpfin | helena@sharpfin.com

Sharpfin is a full-service, modular SaaS solution designed for wealth and fund managers. Its personalised, data-driven platform offers comprehensive client insights, faster onboarding, real-time data access, and greater operational efficiency. With tools for order and risk management, performance tracking, compliance, AI-driven bookkeeping, automated reporting, and client engagement, it helps wealth management firms to stay ahead in a changing market.

The financial industry faces significant challenges, such as high IT costs, complex administrative processes, and ever-evolving regulations. Sharpfin addresses these pain points by automating administrative tasks, allowing wealth managers to focus on their core mission: providing personalised service to their clients. By integrating advanced technology, the platform enhances client insights, improves operational efficiency, and reduces the overall cost of management.

Since its inception, Sharpfin has built a client base that includes reputable financial institutions like Evli, Strand Kapitalförvaltning, Simplicity, Consensus Asset Management, Stavanger Asset Management, and SilverDome. 

Liliya Shakhpazyan
ESG Relationship Manager | liliya@datia.app

Datia is a climate fintech company on a mission to empower investors' transition to sustainable finance, serving asset managers, asset owners, management companies, wealth advisors, and tech platforms.

Datia enables investors to stay focused on their investment strategy while optimizing their sustainable finance process with traceable data, smart insights, and ready-to-share reports. Founded in 2019 and headquartered in Stockholm, Sweden, Datia has a customer network with over $200B in assets under management (AUM).