What is ESG?
Including Environmental, Social and Governance (ESG) factors in a company’s evaluation is not a niche topic any more – yet many uncertainties still persist. What’s even behind those three letters? And how is that relevant for your company? Let’s dig in.
E is for Environment
This one’s easy – right? Just classic corporate sustainability stuff, greenhouse gas emissions, waste management, energy efficiency … Well, you might have to think again. Increasingly, your stakeholders and investors not only want you to consider how your business impacts the environment – but also how a changing environment impacts your business. Think climate change with its rise of extraordinary weather events and the possible impacts they may have on you in the future.
S is for Social
Social factors cover a diverse area of possible indicators to report on. Speaking of diverse, diversity of the workforce is one of the key elements here when it comes to Human capital, as well as the health, safety and salary policies your company employs. But it doesn’t stop with your own worker’s well-being. Data Security, Product Quality and Human Rights in the supply chain are other hot topics for a rising number of important stakeholders.
G is for Governance
Money rules the world? Not any more, at least not exclusively. Investors are growing increasingly risk-sensitive and want companies they invest in to act according to coherent sets of principles and rigorous management systems. Good governance prevents a scandal – or at least helps deal with it, preventing sending the whole company to the ground. Prominent factors here are a comprehensive anti-corruption policy and critical incident protocols. Also, an increasing number of institutional investors and governmental actors are making demands regarding top-level topics such as executive compensation or board diversity.
… and all of that is relevant for my company?
Don’t panic! While aspects like CO2 footprint, employee health and policies regarding board composure are pretty crucial for every company, many other aspects can vary greatly from industry to industry. Thus, every company has its unique set of important ESG topics. Stakeholders like your investors not only accept that, but actively want you to identify the most material ESG topics for your company.
And how do I identify my material ESG topics?
The way to go is to involve your most important stakeholders and start a materiality analysis, including a set of ESG topics you have found material in your value chain. You attribute a certain degree of importance to those topics and then get your stakeholders assessment: what’s influential for their ESG assessment of your company? Then you map out those two assessments, yours and your stakeholders’, et voilà, there you got your material ESG topics.
We at cometis can help bring your ESG reporting to a whole new level.
Click [HERE] to see what ESG services we offer.