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ESG reporting basics for small and mid-size firms

ESG reporting basics start with one idea: show readers what your firm does to the planet and to people, plus how decisions get made inside it, using numbers they can check. ESG stands for environmental, social and governance. A small firm does not need a long report. It needs a short, honest one built on a few good data points.

What an ESG report covers

An ESG report has three parts. The environmental part covers things like energy use, emissions and waste. The social part covers staff, safety, training and the communities you work in. The governance part covers who makes decisions, how you handle ethics, and how you prevent bribery.

You do not report on everything. You pick the topics that matter most to your business and to the people who rely on it, such as customers, staff, lenders and regulators. These are called material topics. A logistics firm may lead with fuel use. A software firm may lead with staff turnover and data privacy.

Sources: Global Reporting Initiative, GRI Standards, topic standards list (globalreporting.org).

Why smaller firms are being asked for it

Large customers and banks now ask suppliers about ESG. Some of them ask in tender forms and loan reviews. Having a simple report ready saves time and shows you manage risk.

Stock exchange rules also push this along. In Singapore, the exchange has Listing Rules 711A and 711B on sustainability reporting, in effect since 20 July 2016. They say a listed company's report should describe its material ESG factors, its policies and results, its goals and targets, the framework it used, and a statement from its board. Your firm may not be listed. Still, the same list works well as a plan for a small report.

Sources: Singapore Exchange Rulebook, Listing Rules 711A and 711B (rulebook.sgx.com).

The standards that guide reports

You do not have to invent a format. The most widely used guide is the set of GRI Standards from the Global Reporting Initiative. They are split into economic topics (the 200 series), environmental topics (the 300 series) and social topics (the 400 series). Most of these were issued in 2016.

Each topic standard lists what to disclose. For example, GRI 302 covers energy, GRI 305 covers emissions, GRI 401 covers employment and GRI 404 covers training and education. You can use one or two of them and say so plainly. Name the standard you used so readers know what the numbers mean.

Sources: Global Reporting Initiative, GRI Standards topic standards list (globalreporting.org).

Three data points to collect first

Start small. Three numbers are enough for a first report, and each can come from records you already keep.

  • Energy use. Add up your electricity and fuel from bills. Record it in kilowatt hours or litres for a full year. This fits the idea behind GRI 302.
  • Staff turnover. Count how many people left in the year and divide by your average headcount. This fits the idea behind GRI 401.
  • Training hours. Add up the hours of formal training and divide by the number of staff. This fits the idea behind GRI 404.

Write down how you counted each one. A clear method matters more than a perfect number, because it lets you compare next year on the same basis.

Sources: Global Reporting Initiative, GRI Standards topic standards list (globalreporting.org).

How to turn the numbers into a report

Keep the first report to a few pages. Give each of the three data points a short paragraph: what you measured, the result, and what you plan to do next. Add a line on who in your firm owns each number.

Then add a short note on governance. Say who signs off the report and whether you have a code of conduct. Avoid big claims you cannot prove. If a number is an estimate, say so. Repeat the same measures every year, and add new ones only when you can collect them reliably.

Share the report where your partners will see it, not in a drawer. A short page on your website or a PDF attached to a tender reply is enough. Ask one customer or lender for feedback on what they found useful, and use it to choose next year's topics. Small, steady progress builds trust faster than a large report that is never repeated.

Sources: Singapore Exchange Rulebook, Listing Rule 711B (rulebook.sgx.com).

Sources

  • Global Reporting Initiative, GRI Standards, topic standards list: globalreporting.org
  • Singapore Exchange Rulebook, Listing Rules 711A and 711B: rulebook.sgx.com