Building a Resilient ESG Program

For years, organizations have touted their sustainability and corporate social responsibility efforts in voluntary reports. Increasingly, though, company stakeholders are demanding more accurate and transparent Environmental, Social, and Governance (ESG) data.

Both retail and institutional investors, for example, are focused on the intersection of ESG data and business growth, recognizing that a company’s commitment to ESG can signal both future opportunities and risks. To investors, strong ESG performance suggests that a company is not only responsibly managing its environmental impact, social responsibilities, and governance practices, but is also positioning itself for long-term success. Companies with robust sustainability practices are viewed as lower-risk, forward-thinking investments that are better prepared to navigate future challenges and drive value.

Regulators are also emphasizing ESG performance, pushing companies to enhance transparency around ESG by mandating compliance and disclosure requirements. In March 2024, the U.S. SEC introduced long-awaited climate disclosure mandates—a major win for climate advocates; however, the mandates were quickly paused due to legal challenges, giving some companies additional time to strengthen their ESG programs. Despite this, U.S. companies operating in the EU and other regions remain obligated to meet stringent international reporting requirements.

Most recently, Governor Gavin Newsom of California signed Senate Bill 219 (SB-219) into law, mandating all U.S. companies doing business in the State of California that meet certain financial thresholds to report on greenhouse gas (GHG) emissions and climate-related financial risks.

It is estimated that SB-219 will affect over 10,000 large businesses today. However, far more small and medium-sized value-chain businesses will also be impacted and required to report climate-related information.

Leading the Charge

As ESG becomes increasingly vital to long-term business strategy, companies are stepping up to meet investor and regulatory demands for transparency and accountability.

At DFIN’s second annual Activate Executive Summit, I sat down with a panel of ESG leaders who shared best practices and actionable insights on how to build impactful programs that foster trust and compliance.

Here’s what's top of mind for business executives leading the charge for ESG at their companies, and how DFIN can help meet those challenges

Doug Brown Of Counsel, Securities & Capital Markets Paul Hastings	“Start by educating directors and executive officers about the importance of ESG reporting.” Based on Doug’s experience, investors are looking for companies with programs in place before investing. It’s imperative to show you are making the effort to be compliant with ESG regulations. Doug adds, “Create a committee within your organization that is responsible for sustainability initiatives.”
Gino Insana Chief Legal Officer & Secretary Petco	“Find the intersection where ESG and business growth meet. Identify what tenets are important to you and your shareholders.” Many of Petco’s partners prioritize similar ESG initiatives, allowing Petco to collaborate with them on programs that benefit their respective businesses and satisfy their customers. Making a net-zero commitment in a cost-effective manner was a priority for Gino’s team. They are making strategic plans and investments and plan to build an internal team to drive ESG efforts, monitor progress, and ensure Petco achieves its environmental goals while supporting long-term growth. Gino adds, “We are looking at budgeting, what’s top of the line, what’s a ‘nice-to-have’” as investors are focused on initiatives that promote business growth.
Steve Beaver SVP General Counsel & Chief Legal Officer Benchmark	“Find a future-proof software solution that meets your ESG needs now and tomorrow.” As Steve prepares to pressure-test assurance numbers for 2025, he emphasizes the need for a robust software tool that can scale with company size and regulatory demands. Steve recommends looking for solutions that not only meet current needs but also offer synergy across your ESG objectives, ensuring adaptability as requirements evolve. When Benchmark was preparing to release its report on GHG Scope 1 and 2, advisors encouraged the company to set even more ambitious goals. Acknowledging the significant effort required to achieve the reductions already realized, Steve set realistic targets to ensure long-term sustainability and measurable progress were attainable. Steve adds, “Don’t overpromise. Find a team of experts to help you determine what you can achieve and when.”
Jax Sargent Director of Corporate Development & Administration A-Mark	“Build the muscle: Prepare for upcoming regulatory requirements.” As stakeholder inquiries around ESG policies grew, Jax’s company proactively sought tools to meet these rising demands. She recommends starting data collection early, well before rules are finalized. Her team, for instance, began managing GHG Scope 1 and 2 data in anticipation of future mandates. Jax also emphasizes the importance of ensuring that data in SEC filings and on your website is accurate, as it helps to avoid potential liability issues and build trust with stakeholders.

ActiveDisclosure for ESG

DFIN’s ActiveDisclosure for ESG Reporting, paired with our expert advisory and consulting services, helps forward-thinking business leaders navigate the complexities of ESG reporting and meet the rising demands from investors and regulators. The purpose-built platform streamlines data collection and drives efficiency through real-time collaboration, enabling teams to work together seamlessly within a single system.

By centralizing data, organizations ensure their ESG data is accurate, reliable, and submitted to stakeholders promptly.

As regulations evolve into mandates, ActiveDisclosure adapts by incorporating new compliance processes, ensuring teams can appropriately tag data according to the latest requirements. DFIN's ESG reporting capabilities include:

• Collection, calculation, and reporting of GHG data across Scopes 1, 2, and 3
• End-to-end carbon accounting and reporting functionalities
• Comprehensive reporting to the SEC for both financial and ESG disclosures

Additionally, DFIN's experts also assist companies in understanding changing global regulations (including the EU's CSRD and California's SB-219), and in creating reports that align with requirements across various regulatory jurisdictions.

As a leader in inline XBRL, DFIN embraces current and future standards. Many regulatory bodies are adopting inline XBRL as the standard language for business reporting, enhancing the usability, consistency, and comparability of ESG data across organizations and industries.

Companies that build thoughtful ESG and sustainability reporting practices with DFIN and ActiveDisclosure are better positioned as regulations change and investor demands increase. By leveraging these resources, organizations can seamlessly integrate robust ESG practices, staying ahead in the rapidly evolving sustainability landscape.

For more insights, watch the full ESG Panel. You can also view DFIN’s latest ESG Webinar: A Rational & Affordable Solution to ESG and Sustainability Excellence.