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The EU plans to expand reporting requirements for companies in 2023, and the Hungarian Stock Exchange recommends creating a roadmap for ESG reporting, which addresses non-financial risks and opportunities related to climate change and inequality using frameworks like GRI and SASB.
Slides
Slide Presentation (12 slides)
Key Points
- ESG stands for environmental, social, and governance.
- ESG frameworks represent the 3 main topic areas that companies are expected to report in.
- ESG captures non-financial risks and opportunities in a company's day-to-day activities.
- ESG is important for securing capital as investors incorporate ESG elements into their decision-making process.
- ESG reporting covers environmental, social, and governance issues, such as emissions, resources use, employee management, and corporate behavior.
- Companies report on issues that are material to them, based on what is considered financially material in their industry.
- The most commonly used reporting frameworks for ESG are the Global Reporting Initiative (GRI) and the Sustainable Accounting Standards Boards standards (SASB).
Summaries
42 word summary
ESG addresses non-financial risks and opportunities. The EU will expand reporting requirements for 50,000 companies in 2023. The Hungarian Stock Exchange advises creating an ESG reporting roadmap. ESG is crucial for climate change and inequality. Reporting uses frameworks like GRI and SASB.
57 word summary
ESG is a framework that addresses non-financial risks and opportunities in a company's activities. The EU will expand reporting requirements for 50,000 companies starting in 2023. The Hungarian Stock Exchange advises issuers to create an ESG reporting roadmap. ESG is crucial due to climate change and inequality. Reporting is typically done using frameworks like GRI and SASB.
151 word summary
ESG, or environmental, social, and governance, is a framework that captures non-financial risks and opportunities in a company's activities. The European Commission has adopted the sustainable finance package, including the proposed Corporate Sustainability Reporting Directive (CSRD), which expands reporting requirements for approximately 50,000 companies in the EU starting in 2023. The Hungarian Stock Exchange recommends that issuers develop an ESG reporting roadmap. ESG is important due to global challenges such as climate change and increasing inequality. Investors, regulators, consumers, and employees demand companies to be good stewards of capital and natural and social capital. The environmental pillar covers emissions, resource use, water stewardship, and sustainability impacts. The social pillar focuses on employee development, labor practices, and product liabilities. The governance pillar includes issues related to shareholders' rights and corporate behavior. ESG reporting is typically done using frameworks like GRI and SASB, with companies publishing sustainability reports or disclosing data through webpages.
437 word summary
ESG, which stands for environmental, social, and governance, is a framework that captures non-financial risks and opportunities in a company's activities. The European Commission recently adopted the sustainable finance package, which includes the proposed Corporate Sustainability Reporting Directive (CSRD). This directive expands the scope of reporting required compared to the previous Non-Financial Reporting Directive (NFRD), and approximately 50,000 companies in the EU will now have to report on ESG issues from 2023.
The Hungarian Stock Exchange has recommended that all issuers develop an ESG reporting roadmap by the end of the year. In response to this, Deloitte has published a series of articles exploring the topic of ESG and how to approach it.
ESG is here to stay due to global challenges such as climate change, transitioning to a circular economy, increasing inequality, and balancing economic and societal needs. Investors, regulators, consumers, and employees are demanding that companies not only be good stewards of capital but also of natural and social capital. Incorporating ESG elements into investment decision-making processes has become increasingly important for securing capital.
The environmental pillar of ESG covers emissions, resource use, water stewardship, land use concerns, and positive sustainability impacts. This pillar is the most complex to report on.
The social pillar focuses on employee development, labor practices, product liabilities, supply chain labor standards, health and safety, and access to products and services for underprivileged social groups.
The governance pillar includes issues related to shareholders' rights, board diversity, executive compensation, and corporate behavior such as anti-competitive practices and corruption.
The materiality of ESG issues varies across different sectors of the economy. Companies report on issues that are financially material to them. Financially material issues can impact a company's financial performance. Double materiality is also recognized as important, which means socially material issues are treated as material alongside financially material issues.
ESG reporting is typically done by applying frameworks such as the Global Reporting Initiative (GRI) and the Sustainable Accounting Standards Board (SASB). Companies publish sustainability reports or disclose data through webpages to showcase their ESG performance.
In conclusion, ESG is a framework that captures non-financial risks and opportunities in a company's activities. The adoption of the CSRD in the EU will require thousands of companies to report on ESG issues. ESG is here to stay due to global challenges and the increasing demand from investors, regulators, consumers, and employees. The environmental, social, and governance pillars cover various aspects of sustainability. Materiality plays a crucial role in determining what issues are reported by companies. Reporting is done using frameworks such as GRI and SASB, and companies publish sustainability reports or disclose data through webpages.