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How To Develop An ESG Program in Your Company 1719055027

Esg framework

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Viktoria Kytina
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21 views

How To Develop An ESG Program in Your Company 1719055027

Esg framework

Uploaded by

Viktoria Kytina
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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HOW TO DEVELOP AN

ESG PROGRAM IN YOUR


COMPANY?
ESG (Environmental, Social, Governance) For those who are just starting out in
refers to a set of measures that can be used the ESG field and want to implement
by stakeholders, particularly investors to an ESG Program in your company,
judge how companies are impacting the here are some steps that can help
world, not just making a profit. you on your journey.

Environmental impact refers to aspects like ESG Program Best Practices:


energy use, water use, greenhouse gas 1 - Choose or construct a relevant
emissions, emissions of other pollutants, ESG framework.
waste management and biodiversity 2 - Conduct a materiality assessment.
maintenance. Usually, they are the easiest
to measured. 3 - Establish ESG goals.
4 - Conduct a gap analysis.
Social impact refers to aspects like human 5 - Map actions needed to meet
rights, gender equality, labor rights, working goals.
conditions, health and safety, employees’ 6 - Prioritize and allocate resources
relations, employment equity, diversity and
needed.
inclusion, pay gaps, corruption and impact
on local communities. 7 - Track progress and hold
accountable.
8 - Report and promote progress.
Governance impact refers to aspects like
transparency, shareholders rights, board of
directors, independence and oversight
board and executive diversity, executive
compensation and fairness.

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Of course, there is not just one way for you to create an ESG Program, but if you
follow these steps, it is very likely that over the course of a year you will have a much
better understanding of how your company is doing in relation to its environmental,
social, and governance goals and how efficient your program is.

1 - Choose or construct a relevant ESG framework:

What elements are compulsory v. voluntary?

What are competitors in my industry reporting on?

To who am I reporting?

Giving an example about Governance, in the United States, a law called Sarbanes-
Oxley requires companies to have whistleblower policies, which allows staff who are
aware of fraud or wrongdoing that can harm investors to report it without fear of
retaliation. This is an important governance protection, which is compulsory that
makes a company more trustworthy to investors.

In another example, for US or European companies that want Goldman Sachs help
going public, they now have to have at least one diverse board member.

B Corp Certification Standards can demonstrate that your company is meeting


certain standards and has been third party qualified for accountability and
transparency on factors including employee benefits.

2 - Conduct a materiality assessment:

A materiality assessment is how we decide and prioritize what metrics we use. An


ESG materiality assessment is a tool used to identify and prioritize ESG issues that
are the most critical to your organization.

May reasonably be considered important for reflecting the organizations’ economic,


environmental and social impacts, or influencing the decisions of stakeholders. A
matter is material if it could substantially affect the organizations’ ability to create
value in the short, medium and long term.

2.1 - Determine which topics are important to your stakeholders.

2.2 - Consider which topics likely to have a social, environmental, or economic


impact in your value chain.
2.3 - Determine which information to disclose about material issues.

3 – Establish ESG Goals:

3.1 - Develop your goals collaboratively.

3.2 - Ensure that your goals are "SMARTIE".

3.3 – Frame your goals as areas to continue, improve, or optimize.

4 – Conduct a gap analysis:

This gap analysis will allow you to take stock of where you are now on your ESG
goals and assess the gap between where you are now and where you want to be.

5 – Map an Action Plan to Meet Goals:

5.1 - Action-plan collaboratively to avoid silos or inefficiency.

5.2 - Ensure the involvement of those who have information, have to implement, or
who are impacted.

5.3 - Make clear roles, responsibilities, timelines, dependencies, and resources


needed.

6 - Prioritize and allocate resources needed:

ESG strategies, data collection, reporting and monitoring will properly be funded and
embedded and understood throughout the whole organization to ensure that
adequate resources are available for your ESG work.

6.1 - Ensure buy-in and leadership of C-level and Board of Directors.

6.2 - Set a realistic budget.

6.3 - Build a sustainability team.


6.4 - Ripple through capacity and information in every function for effective action
plan implementation, monitoring, and reporting.

6.5 – A typical ESG team may include at least: one executive representative,
stakeholder representatives and in-house team members focused on sustainability.

7 – Track progress and hold accountable:

7.1 - Utilize a centralized management systems or data software to more easily track
and trend key metrics.

7.2 - Maintain a regular cadence of meetings and updates to monitor and


continuously evaluate goals, update data, assess gaps, gather lessons learned, and
compare best practices.

7.3 - Enable objective internal reality checks.

7.4 - Leverage third party audits.

7.5 - Ensure board oversight: the Board of Directors must be committed.

7.6 - Align incentives and penalties: tie bonuses of executives to ESG goals. Ensure
that an employee's job description includes their tasks related to the company's ESG
goals. Incremental accountability on an annualized goals is very important in order
to see progress.

8 - Report and promote progress:

What are your goals for promoting your efforts internally vs. externally?

Who is your target audience? What channel is best to reach them?

What metrics and results should be made public or kept private?

How will you communicate your metrics, progress, and goals, especially to investors
and customers?

How will you integrate ESG metrics with other metrics to mainstream ESG?

What format will you use to promote your results?


Will promotion occur through benchmarking (e.g. SASB or GRESB) or an annual
report?

8.1 - Annual Report:

8.1.1 - Communicating ESG strategy to stakeholders while demonstrating alignment


to business objectives.

8.1.2 - Highlighting ESG policies and programs already in place.

8.1.3 - Sharing company-specific ESG goals and metrics.

8.1.4 - Evaluating your progress and engagements in key ESG areas.

Conclusion:

Developing a comprehensive ESG (Environmental, Social, Governance) program


involves a structured, multi-step approach that integrates mandatory compliance
with voluntary best practices. This approach ensures the company addresses
stakeholder concerns and enhances its overall sustainability profile.

By adhering to this comprehensive process, organizations can significantly improve


their ESG performance, fostering a sustainable and responsible business
environment that meets regulatory requirements and stakeholder expectations. This
systematic approach not only enhances transparency and accountability but also
builds long-term trust and value for the company.

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