ESG Virtual Conference Summary – “CEO ESG Checklist”
11/04/2021 | Greg Duncan, MELP, EHS & Sustainability Expert at VelocityEHS
Last Thursday's VelocityEHS ESG Virtual Conference featured a variety of sessions on ESG topics hosted by VelocityEHS experts alongside ESG leaders representing both industry and the investor community. Here, we’ll re-cap the final session of the conference, CEO Checklist for ESG, which provided valuable guidance for business leaders who may be new to ESG, or who want to implement ESG initiatives at their organization but are unsure how to get started.
Session presenter Blake McGowan, Director of Ergonomics Research at VelocityEHS opened the session with a discussion on some of the core benefits ESG can offer to your business.
It pays to be good!
There’s proven financial advantages that companies with ESG programs enjoy compared to those who do not. At a basic level, consumer demand is shifting toward companies who are perceived to be responsible corporate citizens and active in promoting responsible environmental and social behaviors.
ESG is also becoming an essential requirement for the investor community, with investment trends shifting dramatically toward businesses with robust ESG programs and who participate in ESG reporting frameworks. Savvy investors and leading investment houses have analyzed the numbers and recognize that ESG performance is directly correlated with a healthier bottom line.
ESG programs are an increasingly vital component of a well-established enterprise risk management program, providing an effective hedge against a wide range of risks including negative environmental and social impacts, compliance penalties and negative public perceptions of the company, to name a few.
Workers, too, are demanding that companies take a more proactive stance on ESG. One of the hallmarks of today’s workforce—especially among the rising proportion of Millennial and Gen Z workers— is an increasing desire to work for organizations that are responsible corporate citizens. ESG can be the key to attracting and maintaining the highest talent and nurturing the value of your human capital.
Getting Started: The CEO ESG Checklist
Blake then introduced a series of steps and best practices that business leaders should follow as they embark upon their ESG journey. The CEO ESG Checklist includes six fundamental items that will help form the foundation for a successful ESG program, and include:
You need to start with the basics and define what “ESG” means to your business. Your ESG initiatives, policies, goal, metrics, etc. will be as unique as your business and will be defined, in part, by the current size and maturity of your organization, your competitors and peers’ level of ESG performance, and many other factors. However you define ESG for your organization, make sure that you clearly articulate this to your workers, management, customers, investors and other stakeholders.
Beyond sharing your organization’s vision for ESG with your stakeholders you should be taking steps to generate broad understanding of ESG, both at a general level and as it specifically relates to your business. A systematic educational program that covers your business’ ESG initiatives, goals, impacts to the business, evolving risks and opportunities that exist in your industry sector industry, and many other points should be addressed.
Rome wasn’t built in a day, and neither will your ESG program. As you develop a formal strategy for ESG, focus on a relative few, key material ESG risks and opportunities for your business and sector. Prioritize your initiatives to what can be accomplished most immediately and build upon that success.
Goals, targets & measurement
You need to clearly establish and communicate your long-term ESG goals, but must develop short-term targets and metrics to evaluate your progress toward them. Choosing the right metrics that tell you what you need to know can be an iterative process, but remember, focus on what’s in front of you and keep moving forward.
In addition to educating your stakeholders on your ESG program, make sure you’ve got one eye for the future. Keep track of changing regulations, new regulations and emerging ESG trends, and ensure you fully assess their impact on your business. For instance, ESG leaders are beginning to shift their focus from heavy concentration on environmental and increasing their emphasis on the social aspects of ESG. How could this shift affect your ESG initiatives?
Governance & Transparency
This is all about developing and maintaining a robust disclosure framework and ensuring ample two-way communication with your stakeholders. Keeping them engaged with your ESG program is a central goal. Alignment with known ESG standards and reporting frameworks such as SASB, TCFD and SBTi will offer you a means of communicating ESG performance in a format that can be directly compared to peers in your industry sector.
ESG Guiding Principles
The session concluded with some final guiding principles for business leaders to keep in mind and help set some expectations as they set out on their ESG journey.
Simple > Complex
It can be easy to feel overwhelmed as you evaluate rolling out an ESG program for your organization. Look for the path of least resistance in reaching your targets. Big gains in ESG performance don’t require complex systems, processes and policies to achieve.
Focus > Generalization
ESG management is a broad discipline, encompassing environmental management, sustainability, social justice and equity, and corporate stakeholder engagement and disclosure policies. As you work to develop your ESG program, don’t try to eat the apple in one bite. Focus on the targets and goals that are most important to your organization and do those well rather than trying to develop a sweeping ESG program and spreading yourself too thin.
Action > Inaction
Again, it’s easy to feel overwhelmed as you try to determine the scope of your ESG efforts. It’s important to avoid “analysis paralysis” and not spend too much time in the planning phase. Remember, developing your ESG program is going to be an iterative process so act on your plan, evaluate your efforts, adjust your approach and act again.
Progress > Perfection
Don’t expect that you’re going to hit your ESG performance targets right away. If you’re not hitting your targets when you planned, don’t be discouraged. There can often be a lag or other unforeseen factors that cause a discrepancy between anticipated versus actual outcomes. If so, take the opportunity to see where your metrics could be improved or those factors can be addressed.
Judgement + Scoring
Determining successes and where ESG performance can be improved depends on two things: accurate, relevant metrics and your ability to draw insights from that data. The metrics you choose for your ESG program should be measuring what you really need to know and provide actual value to your business. From there, you’ll rely on your team’s knowledge and expertise ESG to turn that data into actionable steps.
Walk the Talk
It’s important to establish ownership and accountability for your ESG program, and be honest with both your performance and stakeholder expectations. Make sure you avoid “greenwashing” and/or setting unrealistic expectations for ESG performance. Not only can this reflect poorly on your organization but can actually cost you.
Looking for More Information?
If you’d like additional ESG resources, we’ve got you covered. You can view recordings from all of our ESG Virtual Conference Sessions at our conference homepage here:
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