What is ESG?
Environmental, Social and Corporate Governance (ESG) is a broad term that describes a company’s awareness of its social and environmental impact. Since the term was first coined back in 2005, ESG has become a key strategic pillar for businesses, and is a top priority for investors and consumers alike.
If you want to assess how well a company is doing compare with others in terms of specific metrics you should assess ESG framework of that company. ESG is a criterion all investors should evaluate, regardless of the industry.
Environmental: E of ESG is concerns include Climate change, waste production, pollution, etc. Standard policies implemented to promote this include investing in clean, renewable energy and lowering carbon footprint in the industry.
Social: S of ESG involves how well a company treats its workers and clients and maintaining concerns around diversity, inclusion, human rights, etc. In the Social factor, companies usually implement clear policies against child or forced labor and ensure workers are treated and paid fairly.
Governance: G of ESG involves how well a company run is in terms of its corporate structure. For example, Like equal representation, anti-bribery policies etc are governance factor to evaluate when assessing of an organization. Other Governance factors to monitor include account company ethical procedure, Enterprise risk management, anti-bribery policies, and the company’s ethics.
The benefits behind the integration of an ESG framework is to evaluate risks relating to these issues before making any decisions to ensure that they do not have a negative impact on factors promoting global environmental and social improvements.
Step towards ESG implementation:
- Carry out a materiality assessment.
- Assess your current baseline.
- Set Objectives and Goals.
- Conduct a Gap Analysis.
- Design your framework and build the roadmap.
- Set an action plan and measure KPI’s.
- Report progress.
What is materiality assessment?
A materiality analysis is a method to identify and prioritize the issues that are most important to an organization and its stakeholders. Materiality means analysing which issues are the most important of being addressed by businesses. After identifying potential sustainability.
In other words, a materiality analysis is a methodology a company can use to identify and estimate possible Environmental, Social and Governance (ESG) which might impact the business and its stakeholders.
What is GRI ESG reporting?
The Global Reporting Initiative (known as GRI) is an international independent standards organization that helps businesses, governments and other organizations understand and communicate their impacts on issues such as climate change, human rights and corruption.
The GRI is a global standard for sustainability reporting designed by organizations and investors to measure business performance. The GRI has been adopted as a requirement by leading institutional investors, government regulators and development organizations around the world.
The GRI offers 30 environmental performance indicators that should be used as part of your environmental sustainability report. These performance indicators are divided into nine primary categories:
Materials: Includes raw materials (natural resources, manufactured chemicals, and materials needed for manufacturing) as well as packaging materials and recycled product content.
Energy: Includes direct and indirect energy consumption, renewable energy amounts used, such as wind, solar, and geothermal, and efforts made to reduce energy requirements through more energy efficient processes.
Water: Covers the total amount of water withdrawn from water sources and company impact on those water sources, as well as the percentage and total volume of water that is recycled or reused.
Biodiversity: Provides information regarding company impact on the biodiversity of adjacent/nearby protected areas and/or areas considered to have high biodiversity, as well as company strategies for managing impacts on biodiversity.
Emissions, Effluents, Waste: Includes total weight of direct and indirect emission of GHGs, ozone-depleting emissions, and NOx, SOx, and other air emissions by type; total water discharge by quality and destination; total weight of waste generated by type and disposal method; total weight of treated, transported, or imported hazardous waste either as well as the percentage of waste shipped internationally; total volume and number of spills on and off-site.
Products and Services: Provides the percentage of products sold and packaging materials that are reclaimed/recycled.
Compliance: Provides the total monetary value of noncompliance fines and number of noncompliance sanctions.
Transport: Describes the impact of transporting your materials and finished products.
Overall: Provides the total values of environmental protection expenses and investments.
GRI ESG reporting Structure:
3- Ethics & Integrity
5- Stakeholder engagement
6- Reporting Practices
- Economic Performance
- Anti-competitive behaviours
- Effluent & Waste
- Environmental compliances
- Supplier environmental assessment
- Occupational Health & Safety
- Training & Education
- Diversity & Equal Opportunity
- Human right assessment
- Local communities
- Supplier Social Assessment
- Customer Health & Safety
- Marketing and Labelling