In a world of change, it is more important than ever that businesses take ownership of and control over their impact on the environment, the communities in which they operate, their employees and supply chains. Increasingly, regulators, investors, customers, media and other stakeholders are demanding organisations not only understand the impact they make but consider how they report on it.
If businesses want to thrive, they will adapt, embrace the change, and take responsibility for building a sustainable and ethical future. This can include key initiatives from diversity and inclusion programmes to environmental reporting. Tomorrow’s success relies on today’s action. Advocating and actioning positive change is no longer an option, it is a necessity as businesses are increasingly held responsible for the mark they make on the world.
The core pillars of ESG explained:
The waste we produce, the emissions we release, the resources we consume, and how we impact the natural world are all factors to consider when looking at how your business affects the environment.
The effects of climate change cannot be ignored, and so effective environmental policy is crucial for building a sustainable future.
Common environmental issues for businesses to consider:
- Biodiversity loss
- Climate change and carbon emissions
- Renewable energy
- Sustainable investment
- Reducing waste and pollution
- Water shortages
Social refers to the impact that businesses have on society both within the company, and at large. Key considerations include the well-being of employees, diversity and inclusion in the workplace, and fair leadership.
This also encompasses the approach a business takes towards ensuring a fair societal financial contribution and making an active effort in giving back to local communities.
Common social issues for businesses to consider:
- Diversity and inclusion
- Human rights, supply chains and sourcing
- Anti-discrimination, bullying and harassment
- Health and safety practices (both inside and outside of an organisation)
- Privacy and data security
Addressing how an organisation is run, corporate governance is the keystone for an organisation’s sustainability.
Governance considers the balance of different stakeholders’ interests and is put into action through the practices and processes by which an organisation is directed. Governance is the core to a corporation’s culture and is essential to setting the tone of its integrity and structure.
Common governance issues for businesses to consider:
- Transparency, accountability and reporting processes
- Board independence, diversity and strategic oversight
- Shareholder or stakeholder activism
- Anti-bribery and corruption
- Ethical business practices
- Risk mitigation and management
The ESG agenda and the rise of non-financial reporting
“Environmental, Social, and Governance (ESG) has evolved from an initial concept allied to corporate social responsibility into a major driver for companies, particularly for corporate board and shareholder behaviour. Climate change has become its poster child, and charges of ‘greenwashing’, its unwelcome sibling. ESG has perhaps become the touchstone of that most elusive goal shared by most businesses, a ‘best-in-class’ corporate reputation. ”
– Marco Carlizzi, Partner at RSM Italy