An Environmental, Social, and Governance (ESG) report is a comprehensive disclosure document that companies use to communicate their non-financial performance across three key areas: environmental impact, social responsibility, and corporate governance. In essence, it's a way for an organization to publicly demonstrate its commitment to sustainability and ethical practices beyond the standard financial statements. The Evolution and Reach of ESG Reporting The concept of integrating social and environmental concerns into business strategy is not new, but the formal structure of ESG reporting as we know it today solidified in the early 2000s. The term "ESG" itself gained traction following a landmark 2004 report titled Who Cares Wins, sponsored by the UN Global Compact, which highlighted how factoring environmental, social, and governance issues into investment decisions leads to more sustainable markets and better societal outcomes. This paved the way for institutional investors to formally integrate these criteria into their capital allocation strategies. When Did ESG Reporting Start? While the movement towards corporate social responsibility (CSR) and sustainability reporting began in the 1970s and 1980s, the shift to structured ESG reporting accelerated with the creation of dedicated frameworks:

• 1997: The Global Reporting Initiative (GRI) was founded, providing one of the first and most widely used global standards for sustainability reporting.


• 2006: The UN Principles for Responsible Investment (PRI) were launched, encouraging institutional investors to incorporate ESG issues into their investment analyses. This move was crucial, as it created the demand for companies to report this data.

What Types of Companies Report? Initially, ESG reporting was most common among companies in high-impact sectors like oil and gas, mining, utilities, and chemicals, which faced clear and significant environmental liabilities and intense regulatory scrutiny. Today, however, virtually all types of public companies report on ESG, regardless of their industry. This shift is driven by investor demand and regulatory pressure, making it a critical expectation for sectors previously less associated with environmental impact, such as:

• Financial Services: Reporting on the financing of climate-transition risks and internal diversity.


• Technology and Software: Focusing heavily on data privacy, cybersecurity, and workforce diversity.


• Consumer Goods: Addressing supply chain ethics, sustainable packaging, and waste management.

For medical device and electronic device companies, reporting is particularly crucial due to complex global supply chains, material sourcing ethics, and the regulatory demands of health and safety. Why Medical Device and Electronic Device Companies Should Report ESG For both the medical device and electronic device sectors, reporting on ESG is rapidly transitioning from a voluntary exercise to a business imperative. These industries face unique and intensifying pressures that make transparent ESG reporting critically valuable.

1. Meeting Investor and Capital Demands

Modern investors, particularly large institutional funds, are increasingly integrating ESG factors into their decision-making processes, a practice known as Sustainable and Responsible Investing (SRI).The reason for this new focus is that companies with strong ESG profiles are often seen as less risky and more resilient, making them more attractive to investors. A poor or non-existent ESG report can lead to exclusion from major ESG-focused indices and investment pools. In short, ESG Reporting and high scoring are seen as reducing risk for investors.

2. Managing Complex and Risky Supply Chains

Both industries rely on global, intricate supply chains involving the sourcing of rare earth minerals, components, and specialized materials. This poses significant social and environmental risks. ESG reports provide the framework to disclose supply chain audits, supplier codes of conduct, and human rights due diligence efforts. Additionally, this evaluation of the Supply chain has afforded some companies insight into the End of Life (EOL) opportunities with their devices, and either reduced their raw material costs and/or created new revenue opportunities through recycling programs.

3. Addressing Regulatory and Compliance Risks

Global regulatory bodies are introducing mandatory sustainability reporting requirements (e.g., the EU's Corporate Sustainability Reporting Directive - CSRD) and due diligence laws. It is important to note that the regulatory and compliance reporting is not limited to just the raw materials and manufacturing of a device but the recapture of materials at device end of life and diversion from the landfill.

4. Enhancing Brand Reputation and Attracting Talent

In a competitive market, a company's purpose and values are key differentiators for customers, business partners, and prospective employees. A powerful statistic demonstrating younger generations' desire to work at companies with a sustainable focus comes from Deloitte's global survey: 70% of Gen Z and Millennials consider a company's environmental credentials and policies to be an important factor when evaluating a potential employer. Furthermore, reflecting this commitment, over 40% of both Gen Z and Millennials report having already changed jobs or planning to change jobs due to concerns about their employer's lack of action or impact on the environment. In conclusion, for medical and electronic device companies, an ESG report is not merely a public relations exercise; it is a strategic risk management, capital-raising, and competitive advantage tool essential for ensuring long-term financial stability and stakeholder relevance in the 21st century.