Environmental, Social, and Governance 2024 Greg DeShields.
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The document discusses the importance of Environmental, Social, and Governance (ESG) criteria in evaluating a company's sustainability and social impact, with a particular focus on the role of human resources (HR) in advancing ESG goals. It outlines the evolution of ESG practices, the integration of Diversity, Equity, and Inclusion (DEI) within ESG strategies, and the challenges related to standardization and potential criticisms of ESG initiatives, such as greenwashing. Additionally, the document emphasizes the need for clear metrics and frameworks to assess ESG performance and its implications for investors and stakeholders.
Environmental, Social, and Governance 2024 Greg DeShields.
- 1. DEI AND ENVIRONMENTAL, SOCIAL, AND GOVERNANCE Greg DeShields
- 3. ESG refers to a set of criteria that investors and other stakeholders use to evaluate a company's sustainability and social impact. Human Resources is important in a company's ESG performance, as they manage the organization's workforce and promote a positive workplace culture. ESG AND HR
- 4. Highly skilled, knowledgeable, and experienced individuals with a track record of delivering exceptional results. Top Talent HR can advance a company's ESG goals by promoting sustainable practices and supporting employee wellness and development. Human Resources Encouraging sustainable practices and prioritizing wellness and development, improving a company's impact on the planet. Implementing initiatives like telecommuting programs and sustainable supply chain practices can reduce a company's carbon footprint. Social ESG AND HR HR is important addressing the social aspect of sustainability. HR policies and practices prioritizing DEI, employee engagement, and labor relations can significantly impact a company's reputation and ability to attract and retain top talent.
- 6. Environmental criteria refer to an organization’s environmental impact(s) and risk management practices. Social pillar refers to an organization’s relationships with its stakeholders. Governance refers to how a company is led and managed.
- 7. 1980 EHS (Environmental, Health, and Safety) Organizations in the United States were considering how to use regulation to manage or reduce pollution. 1990 Corporate Sustainability EHS evolved, and management teams wanted to focus on reducing their firm’s environmental impacts beyond legally required reductions. 2000 CSR (Corporate Social Responsibility) CSR movement began to integrate ideas around how companies should respond to social issues. 2010-2020’s ESG Emerge as a much more proactive (instead of reactive) movement. A comprehensive framework includes critical environmental and social impact elements and how governance structures can be amended to maximize stakeholder well-being. THE EVOLUTION OF ESG
- 9. The process is initiated through senior executive and board-level conversations around the importance of ESG at a private company and how to develop a performance Measurement Scorecard in these areas. The next step is identifying key ESG metrics where improvement is desired and incorporating those metrics into the company's annual Incentive Plan design. PITCH DECK IMPLEMENTING ESG
- 10. ESG AND DEI
- 11. Diversity, Equity, and Inclusion are essential considerations in the corporate culture and similar critical issues in the ESG processes. DEI is tightly interconnected with ESG as they often are systemic drives of many other issues that impact and influence. ESG & DEI PITCH DECK
- 12. HOW DOES DEI FIT ESG? DEI is the 'S' in ESG: Shareholders and investors use ESG criteria as their benchmark for assessing future success. There is a focus on the non-financial side of a company’s performance. Corporate leaders embrace the integration of ESG. Commitment to principles of DEI building more diverse workforce information rather than profits and losses demanding published statements of DEI & ESG goals.
- 13. HOW DOES DEI FIT ESG? Integrating DEI considerations into ESG strategies is essential for companies seeking a sustainable future. Developing and implementing policies and practices that promote DEI throughout the organization, creating inclusive recruitment hiring processes, equitable opportunities for career advancement, and fostering an inclusive culture.
- 15. RATING AGENCIES
- 16. Environmental: • Carbon and climate • Use of natural resources • Waste and toxicity • Sustainability Social • Human rights • Diversity, equity, and inclusion • Labor, health, and safety • Employee satisfaction and engagement • Stakeholders and society • Product safety and quality • Customer satisfaction Governance • Board structure • Compensation processes • Shareholder rights • Audit and risk oversight CATEGORIES OF ESG METRICS USED IN CORPORATE SCORECARDS
- 17. Test Sustainability Indicators Measure ESG Risks SUSTAINALYTICS ROBECO Scores from 0 to 100 VIGEO EIRIS Measure 37 ESG Issues MSCI ESG SCORE AND CRITERIA There’s no one standard system for rating companies against ESG criteria. Several different ESG rating agencies provide clients with assessments of investments based on the company’s ESG performance. All these agencies have different ways of calculating a company’s ESG scores.
- 18. ESG & INVESTING PITCH DECK ESG has gone mainstream. Many ESG rating agencies and reporting frameworks have evolved to improve the transparency and consistency of the ESG information that firms are reporting publicly. ESG scores allow investors to gauge the company’s intentions and actions—from how they treat their employees to how the board decisions are made or if environmental issues are being prioritized
- 19. CALCULATING ESG Using performance based on data gathered from securities filings, voluntary business disclosures, governmental databases, academic research, and media reports.
- 20. PITCH DECK ESG SCORE An organization’s ESG success should communicate its commitment and progress, increase employee engagement, manage the associated risk, and ensure its efforts achieve its goals. While also improving their reputation and performance and gaining greater interest from investors.
- 22. ESG CONTROVERSY ESG is controversial due to the need for more standardization in measuring and reporting ESG performance. Concerns exist about the potential impact on financial performance, accusations of greenwashing, and differing views on what constitutes good ESG performance.
- 23. There is no widely accepted standard for measuring or reporting ESG performance. This can make it difficult for investors and other stakeholders to compare the ESG performance of different companies or evaluate ESG initiatives’ impact. ESG is too focused on social and environmental issues neglecting the financial performance of companies. Prioritizing ESG sacrifices short-term financial gains for long- term sustainability hurting the bottom line and investments. ESG is a buzzword for companies engaging in "greenwashing" making superficial changes to business operations without making significant progress towards sustainability goals. This makes it difficult to identify sustainable companies. Problem One Problem Two Problem Three ESG CONTROVERSY
- 24. ESG CONTROVERSY Stakeholders have differing views on what constitutes "good" ESG performance, which can lead to disagreements and controversy over the value of ESG initiatives.
- 25. DEI AND ENVIRONMENTAL, SOCIAL, AND GOVERNANCE THANK YOU Greg DeShields