Answer To: On March 21, 2022, the SEC proposed rules that would require public firms to provide certain...
Mayuri answered on Feb 12 2023
1. What is ESG reporting?
Across the globe, companies are focusing on making sustainable choices. They're working towards minimizing their operations’ impacts on biodiversity. “There is a real need to evaluate businesses on parameters that are related to environmental, social, and governance aspects and somewhere this is also happening due to changing societal mindset where various stakeholders including consumers activists investors of them, demand more transparency in businesses.” (Sommer, May 19, 2022) ESG refers to environmental, social, and governance issues which investors use to evaluate themselves and to set standards that the companies need to abide by uh to obtain funding. ESG reporting is the disclosure report by a company covering its operation in three areas environmental social and corporate governance companies worldwide are increasingly orienting themselves according to the popular ESG practices. “It helps them reflect positively on their operation’s direct and indirect effects on the environment and on the well-being of stakeholders ESG reporting by a company, would indicate that they have long-term visions for the three P’s that is people, profit, and the planet.” (Sommer, May 19, 2022) Therefore, such reports suggest that the business will work towards adopting ethical and socially just practices and not just work for financial gains such reporting can help the company to reflect a positive image among the investors too it provides a rundown of the impact of businesses in these three areas for the investors.
2. What are the benefits of ESG reporting to the firm?
a. It aims to establish a link between the financial results of the business with the ESG performance SEC has mandated.
b. The sustainability reporting requirements by listed companies to enable businesses to engage more meaningfully with their stakeholders.
c. ESG reporting raises the transparency of the cooperation's mission and its inclination towards environmental and social metrics so the environmental criteria in the report cover the company's performance and practices to reflect how their practices are sustainable and help protect the...