Insights / How companies should report sustainability

From CSR to ESG: How your organisation should be reporting sustainability

27th October 2020

The year 2020 underlined the importance of sustainability, and organisations of all sizes now need to contribute to reducing the UK’s emissions to net zero by 2050.

To meet our emissions targets, as well as our social targets, Corporate Social Responsibility (CSR) has now evolved into Environmental, Social and Governance (ESG).

Together, these three categories mean organisations are more accountable for, and can measure, their social and environmental impact.

From CSR to ESG: How your business should be reporting sustainability - Hero Image

ESG is measured, quantifiable and criteria led, and is used by 93% of the world’s largest companies. Using ESG allows businesses to better understand the lifecycle impact of their products on services; for example, the amount of waste which has been recycled.

In the highly scrutinised aviation industry, Gatwick Airport’s ESG measures in 2019 led to 71% of waste being recycled. It also meant that the quietest aircraft made 62% of the flights, to reduce noise pollution. These changes are the building blocks for a more sustainable future for Gatwick, which retained its Level 3+ ‘neutral’ Airport Carbon Accreditation, by achieving net-zero emissions the previous year.

ESG and profit

Increasingly, ESG strategies are associated with good financial performance. While ESG is focused on ethical practice and sustainability, it can win support from both investors and consumers, so leading to commercial advantage. Increasingly, consumers are choosing to pay more for sustainable and ethical products or services, and this reflects both societal and their own personal values. So, investment in ESG pays two-fold: financially now, plus environmentally and socially in the future.

In 2020, as Covid-19 dominated the news, many people feared that ESG would take a back seat as organisations fought for survival. But sustainability has been the real winner with, for example, the positive effect on our environment thanks to reductions in travel and industrial activity. But the pandemic also taught us to check on the people around us, care for our communities and focus more on employee wellbeing.

ESG is about showing that ethical principles lie at the heart of your business, and that you’ll use your power and platform for change.

In December 2019, Drax was the first organisation in the world to commit to becoming carbon negative by 2030. We also put our local communities first in response to the pandemic by donating money to schools and cancelling energy bills for more than 170 small care homes.

More broadly, ESG is about the ethical principles at the heart of your organisation, and about using the power and platforms we have for change. As such, all organisations have a responsibility to address its criteria.