Second Annual Survey of Global Companies Seeks to Close ESG Accountability Gaps
Last week, Xenophon’s partners in Germany published the 2022 Global ESG Monitor (GEM), exposing some glaring accountability gaps in the state of ESG reporting. The purpose of the second annual “GEM,” as we call it, was to shine a light on the ESG (Environmental, Social, and Governance) transparency practices of 350 companies worldwide.
In short, by helping companies tell their ESG story more effectively, the GEM promotes better outcomes overall. “Better outcomes,” means not only improvement of values-based results related to sustainability, but also bottom-line financial impacts and long-term profitability.
In 2021, Xenophon joined the GEM’s founding partners—cometis AG and Kohorten, along with Currie Communications in Australia, in this effort to ensure that comprehensive ESG data is publicly provided for investors, customers, employees and all stakeholders throughout a company’s value chain.
While the 2021 GEM report was well received, unfortunately the inaugural survey showed that there were good, bad and ugly reports being produced around the world. While all large publicly traded companies produced ESG reports that year, the quality of their reporting varied drastically. Moreover, none proved to be great.
In some cases, companies that clearly placed a strong emphasis on sustainability simply didn’t tell their stakeholders what they were doing in ways that were comprehensive, accessible and thus transparent.
Sometimes this meant they failed to provide basic details about what data they collected, how they collected data, and from where they collected their ESG data.
In other cases, companies used broad, general terms to describe their goals and intentions. But they did not follow that up with specifics about how they would get there. Thus, stakeholders had no good way to track and measure whether the promised outcomes would ever be achieved.
Often the story a company told in its ESG reports sounded very nice, and high-minded. But we know from experience that platitudes and unfulfilled promises ultimately hamstring reputation and create accountability gaps.
There was also a lack of uniform standards used throughout the world to help guide companies in producing reports that were consistent, accessible, and comparable.
Readers of an ESG report are generally a sophisticated and educated audience. They are looking for a level of detail that will convince them a company is a good long-term investment. That means real, verifiable, accessible data.
The mere existence of the GEM helps companies identify the best reporting practices—derived from the various standards that are currently in use–and encourages universal adoption.
For 2022, the GEM examination expanded in some important ways that you can learn about in the Forward and Executive Summary of the report. In short, it evaluated additional measures and data points, and assessed how well a company reported on the materiality analysis they conducted. It also analyzed whether stakeholder engagement processes met a series of important criteria that would ensure they did not produce a “greenwashed” result.
The 2022 report generally showed that Europe is far ahead of the US on most measures, while Australia and Asia also have room for growth.
In mid-December, the GEM and Xenophon will publish a regional report taking a more comprehensive look at the publishing of ESG data by major American corporations. Until then, you can download the GEM’s global report for free here.
We encourage feedback on the report, its contents, methodology and conclusions. A robust discussion around ESG is ultimately an antiseptic to some of the reporting failures that exist, and can push even the highest quality reporting forward.
You can learn more about the GEM and Xenophon’s overall ESG portfolio at https://xenophonstrategies.com/esg-reporting/.