Most major corporations are now investing a considerable amount of money and manpower collecting data needed for ESG reporting, and large consulting firms such as Deloitte and Price Waterhouse Cooper, have announced that they're expanding their ESG consulting departments by more than $1 billion a year over the next 10 years!

There are a number of problems, however, mostly relating to the standardization and frameworks involved in ESG reporting. Europe appears to be well ahead of the U.S. in this regard, but the standards are not fully established there either.

There are about 10 different international agencies that specify "frameworks" for ESG reporting and ratings. Here are 5 of the leading ones…

  • Carbon Disclosure Project (CDP)
  • Climate Disclosure Standards Board (CDSB)
  • Global Reporting Initiative (GRI)
  • International Integrated Reporting Framework (IRF)
  • Sustainability Accounting Standards Board (SASB)
Lipstick Manufacturing

In the U.S., it's likely that the SEC will weigh in on a set of standards that ESG reports must comply with over the next year or two, but that hasn't happened yet. When they do, there's a further problem too, at least for the environmental component — that there's very little energy data available to writers of these reports.

Vaccine Production

In six 70+ page ESG reports we reviewed, we could only find a couple of paragraphs discussing energy use or efficiency. The reason is that the only data sources available are utility bills, which show high level total energy use and cost, but very little detail.

This may be sufficient for a company’s first energy-consumption report where they are merely setting a baseline, but if there's an obligation to reduce energy consumption and improve efficiency over time, subsequent reports need a lot more detailed data to identify where, when and how energy is used or wasted, and what can, or is, being done about it.