There’s been a growing pressure trending in the business world, picking up more and more steam as it snowballs into discussions online and in boardrooms: ESG.
Governments, enterprise corporations, and even your local coffee shop are having a higher interest and need of understanding of what ESG is and how it affects everyone.
But what actually is ESG?
ESG is an acronym for Environmental, Social, and Governance. They are three tenets of sustainability. For the planet, people, and prosperity.
Good ESG means your company is more sustainable. It’s more than just green energy and recycling.
Treating its people well, it complying with regulatory standards, and perpetuating a better and stronger economy for everyone.
ESG improvement opportunities are quite broad, and may be a lot more achievable then you think! From educating and training your workforce, having zoom meetings, and even being innovative in your industry!
We’ll break down the E, S, and G and help give you an understanding of each of these elements. We promise they’re not scary.
The E: Environmental
This deals with what you may expect: the environmental world. Carbon footprints, green energy, manufacturing processes, and more, are all subject to this tenet.
Measuring and acting on environmental criteria should benefit the world in a meaningful way, and can also benefit your company with positive ROI. It’s not just reducing gas emissions or using more efficient lightbulbs, but can be as simple as reducing the amount of flights your company takes to go to meetings and hosting them online instead: you save money on flights, and you save the environment on emissions.
Pretty simple, right?
Environmental criteria could contain:
- Corporate climate policies
- Energy use
- Waste and pollution
- Natural resource conservation
- Treatment of animals
- Manufacturing processes
- Supply chain efficiencies
- And more
By enhancing your action on the E in ESG, you can make your business more attractive to investors, lead to an increase in savings ($11 million in 10 years, even), and make yourself more attractive to consumers.
If you are monitoring, reporting, and acting on environmental criteria, you can have and maintain a competitive edge and make more money for your business!
The S: Social
The consideration of people and relationships is imperative to ensure your business sees success. This is why “Social” is included in ESG!
The social criteria refer to an organization’s relationships with its stakeholders: investors, employees, customers, and suppliers.
But what does that really include? A company may be measured on:
- Human Capital Management metrics (fair wages, employee engagement)
- Impact on the community a business operates in
- Supply chain partners and their location and labour rules
Companies will need to think about different topics and questions to monitor and maintain a high S level in their ESG.
- Holding suppliers to your own ESG standards
- Sharing a percentage of your profits with your local community
- Encouraging employees to volunteer there
- A good presence/regard of health and safety.
- The ethics of how customers are handled!
Your business can see lots of success from reporting on these metrics and addressing those concerns.
In fact, you may even get the top quality candidates for your job postings! On top of that, your employee retention will be higher.
Get the best employees and keep them. Sounds great, right?
Investors want a company that is paying attention to the social component. Show that you’re paying attention to your supply chain, and demonstrate safety policies well.
If you can provide that information in your ESG reporting, you’ll have a leg up on your competitors!
The G: Governance
Governance looks at the standards that ensure a company uses an accurate and transparent accounting approach, pursues integrity and diversity in selecting its executives, and is accountable to its shareholders.
ESG analysts want to better understand how a company’s executive’s incentives are aligned to stakeholder expectations, how shareholder rights are observed, and what types of internal controls exist to promote transparency and accountability by leadership.
What things get examined here?
- Board composition
- Committee Structure Audited
- Bribery and corruption
- Executive compensation
- Political contributions
- Whistleblower schemes
All of that can seem intimidating, but the reality is, if you’re not doing anything wrong or illegal, this is a tenet of ESG that’s easily managed!
Investors may require promises that companies avoid conflicts of interest in their choices of senior leadership. An ideal recipient won’t use political contributions to obtain special treatment nor engage in illegal practices.
All of these are normal asks — ESG truly is easy!
By making this information readily available to potential investors, you make yourself a more attractive option. In addition, reporting on your business’s governance model may highlight issues that you didn’t even know existed! This can give you the time to change them before they become bigger issues that make you less attractive to investors and lose any potential funding.
How to Report for ESG
Investors are increasingly applying these factors as part of their analysis process to identify risks and opportunities. Assets chosen due to ESG criteria have gone up 70% (to $17.1 trillion) in just two years.
If that doesn’t motivate you to start ESG reporting, well…then you didn’t read that properly.
But how do you report for ESG?
There are multiple frameworks and ways you can go about measuring your impact and sustainability against. We at ScriptString suggest the United Nations’ Sustainable Development Goals (UN SDGs) to start.
The UN SDGs cover 17 criteria for evaluating your business and cover the broad spectrum that ESG encapsulates. A framework that is recognized by the largest collection of countries means a better and more global understanding of your company and its impact.
Next, is gathering all the data you need, which can be the tough part. An ESG provider, ESG consultant, or ESG firm is what we recommend intend your next steps to be.
Conclusion: ESG Isn’t so Hard!
Hopefully you understand now that ESG isn’t as intimidating as it can sound to be. Efforts in all three areas of ESG can be natural, and taking action in these areas can increase your income and make your business more efficient. In other words: make more money and save more money!
Not everything is easy, though — it’s a very data-intensive process. It can take a lot of time and effort from employees. The good news is, there are tools to make that much easier on you.
You can cut out hundreds of manpower and work hours slogging through documents by finding a company or tool that helps you do it faster.
ScriptString offers a FREE assessment tool to help you benchmark yourself against the UN SDGs. Our platform automatically gathers the necessary information from structured and unstructured data, with our powerful and unique AI.
The only thinking required is on submitting the documents!
ScriptString would be honoured to help you in your ESG journey. With our platform, you can:
- Consolidate spreadsheets, PDFs, and other files using our AI/ML in minutes
- Reduce the time it takes to collect relevant data by 90%
- Reduce the cost of data preparation and processing by 80%
- Speed up data inquiry by 70%, finding what you need when you need in a single source of truth for ESG data
- Have time to focus on driving impact
Are you ready to implement ESG practices into your business? Take our free assessment, valued at $2,500, to get started!