ESG reporting affects financial reporting in a number of ways. It increases a company’s disclosure requirements, reporting both ESG performance and financial performance. This changes the way companies look at their corporate performance entirely. E.g., the value of a company’s assets may need to be adjusted to reflect their Social and Environmental impact. That is why companies should pursue an integrated reporting approach, allowing them to make better strategic decisions based on two equally important drivers of corporate performance. This may impact financial performance in the short term due to an inevitable increase in costs to attain the right ESG knowledge and processes. In the long term, companies may benefit from the improved brand reputation and capital access.
