What is ESG?
ESG stands for environmental, social and governance aspects within an organisation, creating long-term value for the well-being of the business, society and the planet. They are non-financial indicators which are embedded in all functions of the organization.
Although ESG as a buzzword is trending in the industry, it is synonymous with corporate sustainability. The rise of the ESG metrics is to deepen the discussion on sustainability in a manner that makes sustainability more tangible, measurable and effective. ESG indicators are also aligned to the UN Sustainable Development Goals which provide a universal framework for the issues that require our immediate attention.
Getting Started on your ESG journey
We understand that while the term ESG is relatively new, many organizations are already working towards these indicators because they want their businesses to have a positive impact. Most organizations have already established some good practices, either in environmental, social or governance aspects and sometimes in all three. Different organizations, ranging from small to large, are in various stages of incorporating sustainable business practices. Although starting your ESG journey is a process that may sound overwhelming, it can be broken down into a step-by-step action plan –
- Understand where you currently stand with respect to ESG indicators. – It is often the first step and most sensible one to start looking at your own ESG performance.
- Analyse the risks and opportunities faced by your organisation. Often risks can be for the sector or for a location, or country. You may also need help in getting this validated.
- Explore which direction you want your organisation to head towards. Every organization is unique, and despite a multitude of interesting areas to work on, it is important to choose some. Many organizations need help in getting this prioritized through a third party, which often also includes consulting with stakeholders.
- Identify areas that are relevant to you, particular to your location, industry or product.
Identifying areas that you would like to focus on is the first step.
- Include your value chain and collaborate on your journey. What is a journey if it is not taking your ecosystem along? The only way to invest in a long-term change that lasts is by working collaboratively with others, in this case, the entire value chain.
- Set short-term and long-term goals. Setting feasible/challenging/aspirational targets is absolutely important to kick start your journey,
Conclusion
Working on your ESG metrics is a process that makes you introspect and improve your organisational practices. The first thing is to incorporate ethics and integrity in all business operations and stakeholders. While it may seem overwhelming at first glance, taking the first step in your ESG journey will reap many benefits in the long haul.
Authors – Dr Shashi Kad, CEO & Vaishnavi Ragam, Associate. Sage Sustainability provides bespoke ESG Consulting and Advisory services.