Resources for your ESG learning

Understanding ESG

ESG (Environmental, Social, and Governance) has become a widespread phenomenon, spanning every industry and garnering attention and calls to action from the international community. Investment in ESG has progressively increased throughout the 21st century, with 3,657 signatories representing $90 trillion in assets under management signing the UN-backed Principles for Responsible Investment (PRI) at the beginning of 2020.

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What is ESG?

ESG refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business. These criteria help to better determine the future financial performance of companies.

Environmental

Environmental factors include things like climate impact and environmental challenges and opportunities, such as energy use, waste production & management, climate change, pollution, etc.

Governance

Governance factors relate to how a company is run, which includes things like management structure, compensation, internal controls and accountability policies, shareholder rights, and more.

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Why should ESG matter to me?

With stakeholders and investors inquiring with increasing frequency about what your organization is doing in regard to responsible investment, how you treat employees and vendors, your dedication to sustainability initiatives, and other activities that fall under the ESG umbrella, it’s more important than ever to have answers.

ESG and its goals affect everyone. Reducing environmental impact, championing human rights, and managing your organization in a sustainable fashion can have widespread positive impacts on your employees’ health and wellbeing, stakeholder satisfaction, investor confidence, your organization’s public standing, and many more.

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Who benefits from ESG?

An easier question to answer is “who doesn’t benefit from ESG?”, because the answer is “almost no one”. ESG provides benefits for a vast range of people. Stakeholders will likely see an increase in asset value, investors will be able to rest easier knowing that your organization is better equipped to weather future risks or unforeseen difficulties, employees will experience workplace improvements and benefit from fair and thoughtful policies, local (and even global) communities will benefit from environmental impact reductions, to name a few.

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Where do I start with ESG?

One of the most effective ways to get started is to perform an ESG materiality assessment. A materiality assessment is a tool for identifying and prioritizing ESG issues that are most critical to your organization. The assessment is designed to find the relative importance of specific ESG or sustainability topics and rank them by their potential impact to your organization and their importance to your stakeholders.

After completing your materiality assessment, you should also audit your organization’s current status. Take stock of your current procedures and policies that you think may already have an impact on your ESG efforts, whether those impacts are positive or negative. For instance, have you previously implemented policies that enforce fair workplace practices and promote human rights? Do you have a process for responsibly disposing of recyclable materials in a safe, eco-friendly way? Identifying these provides low-hanging fruit to build off of as you begin your journey toward ESG.

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How do I implement an ESG strategy?

The results of your ESG materiality assessment will provide you with a solid base from which to start implementing your ESG strategy. You’ve now identified ESG issues that will have the greatest impact on your organization as well as stakeholder groups and the issues that are most important to them. Your next steps should be to begin implementing ESG strategies and policies across your organization and engage your stakeholder groups to help successfully implement and seamlessly adopt these new business operations.

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Where do I go from here?

You’ve implemented ESG practices across your organization. Congratulations! However, that doesn’t mean you’re finished with it. ESG is constantly expanding and new practices are introduced all the time, so you’ll want to stay ahead of shifting industry trends and stakeholder priorities and adapt your organization’s ESG approach accordingly.

Now that you’ve implemented ESG, it’s time to tell the world about it. No one is going to know about the changes until you tell them. One of the best ways to promote your ESG success is to submit to industry benchmarks or reporting frameworks such as GRESB or GRI. You should also consider compiling and publishing a corporate social responsibility (CSR) report, which is an excellent way to share your successes with stakeholders.

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