To properly implement an effective ESG program, it must be understood that all three components play an important role and often affect the success of the others. So, if ESG isn’t just about the environment, what is meant by achieving a sustainable future? When implementing an ESG program and also considering the potential ESG ranking, a number of areas must be assessed. The organization itself, its board makeup, how ESG is tied to compensation and strategy, the satisfaction of its workforce, the diversity of the organization, etc., all play a role in rankings. Then the impact of the operations on the community itself must also be considered. No matter what business an organisation is in, there is an impact on the community. Are the organisation’s operations and governance having a positive or negative impact on the community and does the community agree with this assessment? Is the organisation a target of activists or protestors? Has the organisation been criticized for its practices? A true ESG program requires a thorough examination of how the company is run, how its perceived by its employees, how it impacts the community and if its operations are contributing to a healthy environment. In CRTA article “What the Future Holds” the experts indicate that the focus is on the E now but G&S are following close behind.
To get ahead of the game, start with an ESG strategy that looks at all of the components and tie it to the company’s strategy. A thorough review of all the components of ESG will help identify where there are weaknesses, strengths and opportunities. Put in place meaningful targets that are measured and reported in a transparent manner. One of the future considerations mentioned in the CRTA article is that with new standards, reporting requirements and tools, implementing a program will become easier, and it will also mean that what is reported will be subject to more scrutiny and possible penalties or litigation. Organisations that establish a solid ESG program that includes all components, implement transparent reporting and a demonstrate commitment to achieving measurable results will be far ahead and avoid many of the pitfalls of those who are less prepared.
For more information on ESG: Read our most recent thought leadership paper: Canada's Position in the ESG Movement https://mailchi.mp/canadianregtech.ca/esg-paper
Written by: Allison Hawkins
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