Environmental, social and governance (ESG) reporting is no longer just a buzzword nowadays.
While business performance has historically been measured in financial terms, over the past two decades reporting requirements have been changing rapidly.
Large scale awareness of the society on environmental and social issues is demanding a wider range of corporate commitment towards the environment, society and the people.
Companies are therefore relying on the knowledge, skills and processes of professionals to get ahead of corporate reporting trends.
Environmental, social and governance (ESG) reporting is no longer just a buzzword nowadays.
The focal areas include limitation of harm to environment, greening of market offers and the supply chain that delivers it.
The health and safety of employees, community development and the overall sustainability of the economy.
The corporate sector in the past ten years has witnessed a sharp acceleration in the trend toward sustainability in investment management and the embrace of ESG factors in financial analysis.
The World Economic Forum’s ESG metrics say that it is not only the right thing to do, it is the right business thing to do.
As the pandemic made clear, business can only thrive if society thrives.
Here the requirement for the companies is to disclose their climate risks.
From just making profit and sponsoring social and cultural events, this shift is critical to the future of our planet and our society.
Operating in Bangladesh over the past 111 years, BAT Bangladesh at present contributes around 10% of the government revenues through taxes.
Established in 1910 and publicly listed in 1978, BAT Bangladesh is now the highest corporate tax payer in the country.
Selling tobacco and contributing to the society is definitely a challenging task for BAT Bangladesh.
But the tobacco giant has been the state recognized environmental pioneer since the beginning of the afforestation program in 1980.
This crop to consumer operation and huge contribution to the environment and society made the symbolic name of governance in the local corporate sector.
To build a better tomorrow companies need to find ways to make ESG commitments and practice a core part of their business strategies and operations.
BAT feels that the transition from CSR to ESG enabled it to widen the scope of initiatives.
Among those the ESG has been the language used to distinguish investment funds that screen companies for a high level of sustainability performance.
The nature of the systemic risk that climate change poses is becoming clearer.
Record-breaking droughts, floods, fires, and storms destroying communities and disrupting supply chains are hard to ignore.
Despite various efforts from different regulatory bodies the level of ESG reporting in Bangladesh is not at the expected level.
Many businesses in Bangladesh do a lot of CSR types activities, but the CSR reporting here is largely unreliable, poor, and sometimes politically motivated.
ESG reporting is too rare and the understanding of the issue is also largely absent.
The biggest reason is that the companies in Bangladesh are characterized by the presence of highly concentrated family ownership.
Where powerful family members dominate and override the governance process.
Consequently, there are limited incentives for the family owners of these business houses to engage with ESG issues, as these would force them to be more accountable and transparent.
BAT Bangladesh, being a transnational, understands it better that emphasis should be on tilting towards quality.
Those who do are most likely to find that edge, generate alpha and manage downside risks better.
During the Covid-19 pandemic, the company, inspired by the government, acted quickly to ensure business continuity, keeping employees’ safety as the top priority.
While the corporate strategy is people and partnerships, the sustainability agenda includes an excellence in environmental management.
A robust corporate governance to deliver a positive impact on livelihoods of the farmers, human rights, health and safety, people and culture.
In 2021 it reduced emissions by eight percent against the 2017 baseline.
With the setting of a goal to achieve 30% recycled water by 2025, BAT Bangladesh aims at net zeroing deforestation of managed forests in the supply chain.
It has also targeted zero waste to landfill and 95% waste recycled by 2025.
There is 100% monitoring for child labour and 82% of farmers now growing other crops for food or as additional sources of earning.
And last year it reduced total accidents by 67%.
Hope other businesses will follow the principle as the overall momentum around ESG is positive.
The importance of ESG ratings is growing and the industry is rapidly expanding to cater to the varied needs of investors.