About ESG
The Premise is Simple
ENVIRONMENTAL
How your company treats the planet
SOCIAL
How your company treats people
GOVERNANCE
How your company is being run
ESG isn’t about planting trees, donating to charity or happy talk. It’s about hard data.
Metrics.
The world is responding to some big challenges.
Climate change. Ecological collapse. #metoo. BLM. Global inequalities. Human rights violations. COVID. The list goes on.
On a political level, governments are responding with regulation. And the corporate world is responding too.
That response is ESG.
89% of institutional investors are on board. Over $100 trillion has now been committed to investing in ESG positive businesses.
Regulators are introducing new ESG related regulation, which will require reporting and disclosures.
Thousands of businesses are already reporting their ESG metrics publicly.
The flow on effects will impact all businesses. And all businesses will need to respond.
You Can Avoid Unwanted Surprises
A board member is asked over lunch: what are you doing about ESG?
There is no answer.
They don’t know what to say.
The sales team needs to answer all the ESG questions in the tender.
They scramble for a response.
Customers ask for ESG metrics to meet their compliance obligations.
You don’t have what they need.
The impact and ROI is unclear.
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You Can Avoid
Unnecessary Costs
Opportunities
Expectations are changing. Without an ESG plan, you stand to lose business.
Expenses
Unfocused ESG activities can include recurring and hidden costs.
Value
Poor ESG performance
can have a major impact on intangible asset values over time.
It’s useful to think about ESG in terms of Domains and Metrics.
There are 18 Domains under the E, the S and the G.
Under each Domain, there are Metrics.
- The Domains
E
Air
Air pollution is a leading cause of ill-health and premature death. For many businesses – particularly those with industrial processes – contribution to air pollution is common.
Water
Water is essential for the health of the environment, society and economy. Every company uses water, and some contribute pollution to water systems, like lakes, rivers and oceans.
Waste
Waste is just that: a waste. Resources are lost. Single-use plastics are a big part of the problem because they generally can’t be recycled and often aren’t biodegradable.
Climate
How your business contributes to the causes of climate change Man-made climate change, driven mainly through the build-up of greenhouse gases (GHGs) in the atmosphere, presents an existential threat to human civilization. Learn more about how your company could be contributing to climate change and what metrics you can use.
Resource Use
Resources are limited and demand for them is growing. Companies need to get smarter about how they are used, particularly in manufacturing, industrial, agricultural and construction applications.S
Positive Innovation
Companies are under increasing pressure to create products and services that create positive environmental or social value. Innovation unlocks these needs.
Community Benefit
Strong communities are good for business. Particularly for companies stituated in – or close to – local communities, providing benefit to those communities is not just an expectation, it can be a strategic imperative.
Diversity & Inclusion
A diverse workforce is good for business. Gender and cultural diversity, particularly within executive teams, support better decisions and superior financial and non-financial performance.
Human Rights
Around 40 million people are in some form of modern slavery today – including children. Companies are expected to manage this and other human rights risks across their supply chain.
Fair Pay
Paying fairly helps eliminate inequality, discrimination, financial hardship and poverty. When companies fail to provide fair pay, they can widen gaps between different groups of people.
Skills and Training
Skill shortages are getting bigger as industries evolve. According to the World Economic Forum, more than half (54%) of all employees will require significant reskilling.
G
Land
Companies can cause severe damage to land-based environments (such as forests and grasslands). This is especially relevant in ecologically sensitive environments.
Leadership
Companies respond to this issue by implementing policies and procedures that ensure company leadership is selected, is governed, is trained with appropriate oversight.
Engagement
Companies respond to this issue by implementing processes to identify and engage with people and organisations that have a relevant interest in the company’s social and environmental performance.
Ethics
Companies respond to this issue by establishing policies, internal reporting mechanisms and dedicated oversight to ensure ethical corporate behaviour.
Risk
Companies respond to this issue by establishing a process to continually monitor, assess and respond to social and environmental risks and opportunities
Transparency
Companies respond to this issue by tracking, monitoring and reporting data on its social, environmental and economic impact
- The Metrics
Under each of the Domains there are Metrics.
Common metrics have been endorsed by the Big Four consulting firms and the World Economic Forum.
But you don’t need to worry about the Metrics for now.
The most important step is to work out the Domains that matter most to your business.
Then the Metrics become clear.
- What About Ratings?
For public companies, ESG Metrics get turned into ratings by rating agencies.
The main ESG rating agencies are MSCI and Sustainalytics.
But even the biggest credit agencies – Moody’s, S&P and Fitch – are getting into ESG now.
Private companies don’t need to worry about ratings. For now.
- What About Standards?
There are many ESG frameworks and standards emerging.
Examples include SASB (the Sustainability Accounting Standards Board).
And GRI (the Global Reporting Initiative).
It may be useful to know about these. But then again, it may not be.
Standards aren’t standard yet. And adopting them too early can be distracting.
- You Need a Plan.
We’ve developed a simple way for you to build a One Page ESG Plan. It only takes around 20 minutes.
It’s super powerful because it focuses on what matters.
And its simple enough to be owned and used.
- Get Clarity
Work out what ESG issues really matter.
Help your business communicate ESG strategy.
Avoid unwanted surprises
- Get Focus
Prioritise effort on the things that matter. Report metrics and progress in a simple format.
Avoid unnecessary costs