Over the course of the past few years, sustainability has become more integrated in the world of business. We have observed various approaches in creating both ESG plans and sustainability strategies. Some are successful, some are not.
Observers have criticized businesses for greenwashing, as they focus their sustainability efforts primarily on marketing rather than action. As the evolution of sustainability or ESG continues in the business world, the pressure builds to have the right approach. The reasoning behind this – regulations.
As regulations continue to come into action around the globe, not only may companies risk losing customers, access to capital, or the inability to mitigate potential climate risks. Companies may now face fines for inaccurate reporting and in some cases inaction.
Whether just starting on your ESG or sustainability journey, or looking to refine your strategy to be audit-ready, ScriptString is here to help. Let’s dive into creating an ESG plan that will not only be good for the planet and its people but good for your business too.
Your ESG Plan Starts With Corporate Governance
How can businesses start with ESG or sustainability?
Like most aspects of a business, it starts with your corporate governance. In theory, having good corporate governance will set your company up for sustainability success. Good corporate governance sets policies and procedures in place for all aspects of your business – ensuring transparency, managing risks, delegating responsibility, and accountability.
Good corporate governance also incorporates all three pillars of sustainability – social, economic, and environmental. By bringing an environmental and social, especially risk management approach into your corporate governance strategy you will be able to excel in all of the sustainability pillars (& ESG … after all governance is a key component).
Start with a sustainability policy, a key part of every sustainability strategy or ESG plan.
While creating a sustainability policy doesn’t do the hard work for you, it does set the tone for what you want to do, and strive for in this space, and how you are going to do it. Check out this article on sustainability policies – why companies need them and how to get started!
Get the Board on Board
Involve all stakeholders in the ESG plan. Public companies must involve the board. A Boston Consulting Group survey found that “boards can add the most value in their mission of stewarding the company over the long term by ensuring that sustainability is integrated into the corporate strategy.“
However, many boards remain uninvolved. Leaving sustainability or ESG initiatives and disclosure as a silo that only a few team members are responsible for overseeing it. When it comes to sustainability and ESG, boards should have 3 areas of focus:
- Sustainability Hygiene
“This is about attention to ESG-related matters such as materiality, data, reporting, stakeholder engagement, and sustainability initiatives.” - Sustainability Controls and Practices
“Oversight of how the company is adopting controls and best practices to assure the integrity of its ESG journey.” - Strategic Reflections and Implications
“This involves discussion and insight on how the societal and business context is changing and how sustainability can become a source of lasting competitive advantage and value creation.”
Doing so will mean that your company is not just going through the motions of disclosing, but really paying attention to sustainability, ESG, and the implications and opportunities for your business. Make your disclosures more accurate and your ESG plan more engrained in your business overall.
If you lack a board, actively involve other stakeholders, including employees and investors. Educate your workforce to ensure active participation in integrating your ESG plan or sustainability strategy into the business, especially for employees unfamiliar with this domain.
Data is an Important Asset
It cannot be overstated the role that data plays in the sustainability or ESG reporting and compliance process. Data is the backbone of sustainability.
Being so, your ESG plan or sustainability strategy must include a carefully crafted data strategy. This data comes from every aspect of the business, even from outside of the business with Scope 3 emissions. Having accurate data to disclose is extremely important, not only to avoid facing fines but also for your progress going forward.
Ensuring your data is safe, secure, accurate, and high quality is difficult when using Excel spreadsheets to consolidate and manage data. Processing and calculating data manually leaves room for error.
Working with a technology partner to aid in automating your reporting and disclosure process can be helpful (like ScriptString.AI).
Audit Ready?
“Only 25% of companies feel they have the ESG policies, skills, and systems in place to be ready for an external audit”.
As regulations increase, companies must prepare for sustainability audits, making readiness crucial. Yet, many companies aren’t.
“Companies better prepared for an ESG audit tend to have boards engaged on ESG issues, conduct regular ESG training and institute controls for ESG data” was noted in a recent KPMG study. If you include the above ideas in your ESG plan, you will likely be more prepared for future audits. Even try subjecting your current ESG disclosures to a voluntary audit to prepare and see how compliant your business is!
Your Future ESG Plan – Track, Report, Reflect, Act
Like many aspects of a business, sustainability, and ESG are not meant to remain static. Your strategy and efforts can and should change over time.
This is why it is important to reflect on your successes, downfalls, and opportunities in this space. Being able to adapt your strategy or ESG plan to reflect changes in the regulatory landscape, risks, or opportunities is important. Don’t look at your strategy as a one-time exercise. Much like a marketing or sales strategy, it should be reviewed often.
In the ever-evolving landscape of sustainability, your ESG plan stands as the cornerstone of your commitment. From solid corporate governance to active board engagement, accurate data management, and meticulous audit readiness, every step matters. At ScriptString, we understand the essence of a robust ESG strategy. It’s not just a document; it’s a dynamic, adaptable roadmap for your business and the world. Let your ESG journey be transformative, transparent, and trailblazing. Together, let’s shape a future where sustainability isn’t just a goal – it’s a shared reality.
