If the temperatures rise by about two more degrees Celsius from the present level, there will be five times more storms, droughts, floods, and heat waves in 2100, according to IPCC. This is only one of the long list of disturbing facts about the current state of the planet, but the bigger questions are, “how did we get here?” and “how do we overcome the challenges?”
The problems of global warming and climate change have been caused by human activities, especially emitting excess greenhouse gases (GHG) that trap heat in the lower atmosphere. The answer to the challenge is adopting ESG sustainability in its totality, reducing not just emissions but also adopting responsible and ethical operations in companies. As more governments, investors, customers, and communities appreciate the problem, they are also crafting strategies for addressing the issue. One of the efforts is to only buy, invest, or associate with companies that are sustainable.
So, your company cannot be left behind and the best approach is to adopt ESG sustainability. Keep reading to learn more about sustainability, its associated benefits, and the right ESG procedure to follow.
What is ESG?
Environmental, social, and governance (ESG) refer to the three primary factors used for measuring the sustainability and ethical impacts of a company. The environmental factor looks at how a company safeguards the environment, such as addressing climate change, ecological restoration, and biodiversity protection. Some corporate managers confuse sustainability with the environmental factor only, but the UN Conference on Environment and Development of 1992 demonstrated that it extends to all areas of company and human operations.
The social factor looks at how companies relate with the community, employees, customers, and suppliers. This criterion is aimed at helping to ensure your company is making a positive impact on the society. For example, are your employees remunerated appropriately? Does the company have insurance to take care of the employee’s health for exposite to work related risks?”
The last factor in sustainability consideration is governance, and it deals with organisation leadership.
For example, what is the composition of your company’s management board and remuneration? It also factors in internal controls, shareholder rights, and audits.
Special Benefits to Expect for Focusing on ESG Sustainability
The primary benefit of adopting ESG sustainability in your company is that it offers the opportunity to help address the challenges facing the planet. For example, cutting down the company’s carbon footprint can help to address the challenge of global warming. Other benefits to expect from adopting ESG sustainability include:
- It is an excellent way to build a strong brand.
- Following the right ESG procedure can help to build a more committed and hardworking workforce.
- It is crucial for cutting down the cost of operations in your enterprise.
- Good for compliance with both local laws and adhering to international best practices.
- An awesome strategy for winning the support from investors.
ESG Procedure: The Five Main Steps to Follow
Now that you know the benefits that come with adopting ESG sustainability, what is the right procedure? This is very important because at the end of the day, stakeholders want to be able to check and say this is the most sustainable company. So, here are the top five steps you need to follow:
- Carry Out a Comprehensive Review of the Company Operations
The first step in an ESG procedure is to understand the present status of the company. Therefore, you need to carry out a comprehensive review of the organisation operations to identify the main ESG risks and opportunities. This will reveal the areas where the company is lacking so that you can fix them. If your company is releasing a lot of emissions, you might target cutting down the carbon footprint.
- Ask Stakeholders about their Preferred Areas of Interest
One of the primary reasons for adopting sustainability in your company is to tell stakeholders, "Look, the organisation is working hard to help make the planet a better place." Therefore, you need to involve them from the beginning to ensure that the path taken for sustainability is clear and in tandem with their preferences. Therefore, engage them in different platforms to learn what they prefer. Remember that their recommendation will require further scrutiny in the next step, materiality assessment.
One of the most emphasised topics of action is staff and community health. Therefore, your company might want to prioritise insurance for obesity, weight management, gastroplasty and surgery procedures. Often, most companies opt to help their staff and immediate family members to meet health related costs for both in-patient and out-patients’ needs. As a company, make sure the plan installed for this kind of support is made clearly outlined.
- Carry Out a Materiality Assessment
Materiality means that you only focus on the area that has the greatest impact on sustainability. A company that deals with hospitality and tourism might prioritise habitat restoration. However, a financial-management firm might consider social empowerment as a more material topic because of its operating design. Remember that no matter the topic that you select, every detail of the impact, whether support for community surgical procedure, diet-related intervention, or greening focus, should be captured accurately to reduce the danger of greenwashing.
- Craft a Strategy for Implementation
Identifying the right material topics or areas of action is only the beginning. The next step in the ESG procedure is preparing an implementation plan. This involves setting out clear goals and the path to achieving them. For example, if you target to achieve carbon-neutral status by 2040, what steps are required along the way?
Another example might be helping to address the challenge of weight management, and obesity in society. So, what procedures would your company adopt? Make sure to capture the status of the challenge right away, explain why it is of great concern to the company, and the methods, from endoscopic gastroplasty sleeves use to diet related education. For example, has the community around been suffering for long, may me months or years, with weight issues and urgently need bariatric experts?
As you craft the plan, make sure to include key performance indicators for assessing the progress. If you see the indicators are not being met, it is time to review the process and make changes to get the whole ESG procedure back on track. For example, you might want to change the lamps in the entire company to meet specific rates for carbon footprint reduction.
The number of people who have been helped to address health challenges, such as obesity or overweight, through bariatric procedures, might be an excellent indicator of progress.
- Gather Data, Analyse, and Prepare Accurate ESG Reports
As you follow the ESG procedure, it is important to ensure that the information is captured accurately. This means that information gathering should start after you make the decision to adopt sustainability reporting. Then, analyse the data and prepare ESG reports for stakeholders. This will also be an excellent idea to set the next phase of ESG reporting, probably the next financial year.
As you can see, the ESG procedure can be rather complex. To be able to get this right, you need to have the right sustainability management software to implement the selected framework, gather data, analyse and prepare the recommended reports. A good example of these apps is diginexESG and diginexLUMEN. You might also want to work with a professional ESG consultant to help define the process, craft the right plan and implement the selected strategy. At Diginex.com, we have the best app and professionals you can count on to get the ESG procedure correct.