UNDERSTANDING THE NEED FOR ESG PLANNING AND MANAGEMENT

WHAT IS ESG?

The ESG Strategy (Environmental, Social and Governance) is a method of assessing businesses based on their ESG practises. Investors utilise this knowledge to evaluate the long-term viability, risks, and possibilities associated with a firm or investment in relation to environmental, social, and governance (ESG) concerns. The objective is to single out firms that employ commendable sustainability policies in order to foster the development of a circular economy, with the hope that these firms will come to appreciate the significance of the ESG journey and its potential to improve financial performance and reduce risk.

WHAT IS THE NEED FOR AN ESG STRATEGY?

More and more people are realising that short-term business decisions have lasting effects on the health of the planet, the well-being of society, and the quality of corporate governance and risk management. Climate change, water shortages, and resource depletion are just a few examples of the environmental risks that can have a major influence on a business’s bottom line.

One company’s reputation and earnings can be negatively impacted by its treatment of employees, respect for human rights, or interactions with the local community. A company’s risk profile and long-term viability can be affected by governance concerns like transparency, CEO compensation, and board composition. In the long run, it can improve financial performance and reduce risk by pointing out to investors the businesses best able to handle these challenges and seize these possibilities. In addition, many investors seek to invest in a way that is consistent with their values and ethical standards, and ESG techniques facilitate this goal. Furthermore, ESG strategies are growing in significance as stakeholders, regulators, and the public pay more attention to these concerns and corporations are required to be more transparent about their environmental and social effect.

MITIGATING ESG RISKS THROUGH AN ESG ASSESSMENT

Standard ESG analysis involves looking at how well a firm does in terms of the environment, society, and governance. Methods for conducting an ESG analysis may vary, but often include those listed below.

1. Data collection: Annual reports, trade databases, and the media are just a few of the places where ESG analysts can find the data they need to analyse a company’s environmental, social, and governance practises and performance.
2. Data analysis: An ESG compliance score for the business is calculated using the data collected. To compare the company’s performance to that of its rivals or to industry norms, one approach is to use comparable or industry-wide measurements.
3. Scoring and rating: According on how well it does across all ESG indicators, the firm will be given a score by the ESG assessors. In this way, firms in different sectors may be compared to one another based on objective metrics.
4. Report and communication: The ESG assessor will write a report detailing their results from the study that may be distributed to clients, stakeholders, and other interested parties.

Note that since businesses and assessors utilise different methods and frameworks, there may be some variation in the outcomes of your ESG evaluation.

WHAT DOES A SUSTAINABILITY CONSULTANT DO?

The role of a sustainability consultant is to offer advice to organizations on how they may improve their ESG metrics. The consultant gives advice to businesses, governments, and other groups to create and implement sustainability initiatives.

The responsibilities of a sustainability consultant can vary depending on the organization they are working with and the specific project they are working on. Some common tasks of a sustainability consultant include:

Conducting sustainability assessments: Considering and analysing the ways in which a company has an impact on or could have an impact on environmental conditions, social conditions, and institutional frameworks such as governance.

Developing sustainability strategies: The process of recognizing, ranking, and addressing sustainability challenges and opportunities.

Implementing sustainability programs: Facilitating the introduction of energy-saving, waste-cutting, and environmentally responsible purchasing programs within businesses.

Communication and engagement: Facilitating interaction between organizations and their stakeholders to address sustainability challenges.

Measuring and reporting: Helping businesses account for the entire supply chain when calculating sustainability performance and reporting on their progress.

Carbon management, water management, a sustainable supply chain, and sustainable finance are all fields in which sustainability consultants might specialise. They may also be expected to maintain familiarity with emerging sustainability regulations and standards.

KEY PERFORMANCE INDICATORS IN A SUSTAINABILITY AUDIT

Key performance indicators (KPIs) are used in a sustainability audit to measure and track an organization’s performance and progress in relation to its ESG impacts.

Different organizations may use different KPIs, but some common examples include:

Carbon emissions

Measuring and tracking an organization’s greenhouse gas emissions, including Scope 1, 2 and 3 emissions.

Energy consumption

Measuring and tracking an organization’s energy consumption and efficiency.

Water usage

Measuring and tracking an organization’s water usage and efficiency.

Waste management

Measuring and tracking an organization’s waste generation, recycling, and disposal.

Social performance

Measuring and tracking an organization’s performance in relation to labour practices, human rights, and community engagement.

Governance

Measuring and tracking an organization’s transparency and performance in relation to governance issues, such as executive compensation, board composition and anti-corruption.

Sustainable procurement

Measuring and tracking an organization’s performance in relation to sustainable procurement of goods and services.

Carbon footprint

Measuring and tracking an organization’s carbon footprint, including scope 1, 2 and 3 emissions.

Environmental impacts

Measuring and tracking an organization’s environmental impacts, such as air and water pollution and biodiversity loss.

Return on investments

Measuring and tracking the return on investments made in sustainability initiatives.

These are just some examples of KPIs. It’s important to note that the precise KPIs used in a sustainability audit will vary depending on the audit’s scope and the organization’s goals and priorities.

WHAT ARE THE INTERNATIONAL STANDARDS ON ENVIRONMENTAL SUSTAINABILITY?

Organizations can employ ESG expertise and solutions to evaluate and enhance their environmental sustainability performance in accordance with a number of internationally recognised standards and frameworks. The following are examples of widely accepted and implemented standards:

1. ISO 14001

This is the gold standard for environmental management systems around the world. Using this guide, businesses may better understand how they affect the environment, learn how to mitigate those effects, and ultimately boost their environmental performance.

2. Global Reporting Initiative (GRI)

This is a standard reporting format for environmental impact around the world. It offers a standardised method for businesses to report on their impact on the environment, society, and the economy.

3. The Greenhouse Gas Protocol (GHG Protocol)

This is a worldwide standard for reporting and tallying greenhouse gas emissions. Companies can use this as a benchmark against which to measure their greenhouse gas (GHG) output and progress toward emissions reduction goals.

4. The Carbon Trust Standard

This is a certification standard that recognizes organizations that have demonstrated a commitment to reducing their carbon emissions.

5. The Energy Savings Opportunity Scheme (ESOS)

In the United Kingdom, businesses of a certain size must participate in this mandated energy assessment programme. Organizations are obligated to perform energy audits and find ways to reduce energy consumption.

6. The Sustainability Accounting Standards Board (SASB)

This is a non-profit organization that provides sustainability accounting standards for use by publicly listed companies in the U.S.

7. The Task Force on Climate-related Financial Disclosures (TCFD)

This is a framework that provides recommendations for organizations on how to disclose information related to climate risks and opportunities in their financial filings.

8. The Sustainable Development Goals (SDGs)

The United Nations adopted this plan for sustainable development in 2015. A wide range of environmental and social issues, such as climate change, access to clean energy, the development of ecologically friendly cities, the promotion of sustainable consumption and production, and so on, are among the goals of the overall 17 goals.

These are just a few examples of international standards and frameworks for environmental sustainability, but there are many others that organizations can use to improve their environmental performance.

UNDERSTANDING ISO 14001 – ENVIRONMENTAL MANAGEMENT SYSTEMS (EMS) – KEY ESG SERVICES

When it comes to managing a company’s impact on the environment, the international standard is ISO 14001. (EMS). It gives businesses a road map for figuring out how to lessen their negative effects on the environment and implement new practises to boost their environmental performance.

The standard is based on the Plan-Do-Check-Act (PDCA) cycle, which is a continuous improvement model. The PDCA cycle is composed of four phases:

Plan

In this phase, the organization identifies its environmental aspects, legal and other requirements that apply to them. The organization also establishes its environmental policy and objectives and develops an action plan to achieve them.

Do

In this phase, the organization implements its environmental management system and carries out its environmental activities.

This includes activities such as training employees, operating procedures, and monitoring and measuring environmental performance.

Check

At this stage, the company evaluates its environmental progress considering its stated goals and policies.

To ensure its environmental management system is functioning properly, the company also does internal audits and consults with outside experts.

Act

In this stage, efforts are made to identify environmental issues and implement solutions. The company also conducts audits of its environmental management system to ensure it is up-to-date and efficient.

With an external certification procedure and ESG activities in place, a company can show its dedication to the ISO 14001 standard and realize its benefits.

Compliance with the standard is not something that can be certified once and left alone, but rather must be worked on and improved upon on a regular basis.

ISO 14001 can be utilized by organizations of any size and in any sector, and it can be used in any facet of the business. As the de facto standard for environmental management systems, it is the focus of numerous consultancy initiatives.

WIDELY ACCEPTED ESG INITIATIVES

Environmental, Social, and Governance (ESG) initiatives are actions that organizations can take to improve their ESG data and performance. Here are some examples of common ESG action plans:

Environmental initiatives

• Using less energy and producing less carbon dioxide by switching to cleaner, more efficient techniques.
• Substituting traditional energy sources with more environmentally friendly ones like solar and wind
• Reducing trash and increasing recycling efforts
• We Must Act to Decrease Water Waste
• Sustainable purchasing practices are being adopted.

Social initiatives

• Creating humane work policies and labour standards
• Offering courses for the advancement of staff
• Facilitating Social Investment and Community Engagement
• Putting into action practises and procedures that encourage and support diversity, equality, and inclusion.
• Making sure workers have access to safety programmes.

Governance initiatives

• Improving transparency and communication with stakeholders
• Implementing a robust risk management system
• Adopting a code of conduct and ethical policies
• Establishing a system of internal controls and audits
• Implementing policies to address corruption and bribery

These are just examples of the initiatives that organizations can take to improve their ESG performance. The specific initiatives will depend on the organization’s goals, objectives, risks and opportunities and can be included in operations via consulting. Additionally, organizations are also increasingly being held accountable by regulators, investors, and other stakeholders for their ESG performance, which is making ESG initiatives and strategies more important than ever for businesses and any company.

ACHIEVER NET ZERO EMISSIONS

There are several ways that organizations and countries can achieve net zero emissions:

1. Reduce emissions:

Emission neutrality can be attained more rapidly if greenhouse gas emissions are cut. Energy-saving devices and greener transportation and farming practises can assist achieve this goal.

2. Carbon capture and storage (CCS):

CCS is a technology that captures carbon dioxide emissions from power plants, industrial processes and other sources before they are released into the atmosphere and stores them underground.

3. Carbon offsetting:

Carbon offsetting is the practise of obtaining carbon credits from programmes that lower emissions in other industries or geographic locations to make up for the greenhouse gas emissions that a company or government cannot eliminate fully.

4. Reforestation and afforestation:

Biomass, leaves, branches, and roots are all places where trees can be found storing carbon dioxide that they have taken in from the air. That’s why it’s so important to both preserve current forests and plant new ones to combat climate change and its accompanying rise in carbon dioxide levels.

5. Blue Carbon:

Blue carbon refers to the carbon stored in coastal and systems, such as seagrass, mangroves, and salt marshes. These ecosystems can store up to five times more carbon per area than terrestrial forests.

ESG CONSULTATION

Ruskin Felix Consulting provides services in the areas of environmental, social, and governance (ESG) risk assessment, ESG component analysis, and continuous consulting. Our ESG consultants are ISO-trained auditors who have experience and a keen interest in ESG reporting and climate change. With their expertise, businesses, investors, and asset managers around the world may take a more all-encompassing approach to regulate ESG measures, resulting in vital insights and processes that can be used to construct sustainable firms through the application of cutting-edge technologies. ESG consultants at Ruskin Felix evaluate and audit clients’ environmental risk exposure.

Founded in 2019, RFC is conscious of decades of environmental unrest, and has its own incubator that focuses on environmentally sensitive projects. Do get in touch with our consultants to discuss mutual synergies and ESG plans and initiatives.