What is ESG?
The acronym ESG comes from the words Environmental, Social and Governance. These have become the three broad categories on which today’s organizations are judged. Think of ESG as a framework. It clubs all important parameters into these three broad categories. ESG metrics assess companies beyond traditional performance metrics, like revenue and profit. ESG stresses the quantifiable impact, the impact that can be measured and reported upon.
Why ESG?
Because we are human. Part of being a responsible company is increasingly looking at its footprint on the planet and communities in which we operate. The question we need to ask ourselves is, are we making this world a better place? If the answer is, we can do better, then being aware of our impact on the planet and society is the first step we need to take – before we can even think about how to solve the problem we have created.
Because your ecosystem wants and demands it. Customers, partners and vendors are becoming increasingly more mindful about who they do business with.
Because it’s required. More and more government and non-government organizations want to know what you are doing on the ESG front, and they will hold you accountable for it.
Because your company’s future depends on it. Investors have started using ESG criteria to assess which companies are they interested in investing in.
Because it creates competitive differentiation. All things being equal, a company with higher ESG standards is likely to win business against its competitors.
What are some examples?
Environmental
- Impact on Climate
- Energy Efficiency
- Renewable vs Non-Renewable Use
- Waste Management
- Water Management
- Use of Non-Biodegradable Materials
- Impact on Biodiversity
Social
- Impact on Local Community
- Human Rights
- Workers’ Rights
- Health and Safety
- Fair Pay
- Supply Chain Standards
- Minority Interests
- Upliftment of Economically Weaker Communities
- Volunteering for Causes
- Employee Benefits
- Equal Opportunities
Governance
- Corporate Governance
- Executive Pay
- Diversity
- Business Ethics
- Tax Strategy
- Transparency
- Compliance
What ESG trends are we seeing?
- Transparency in ESG Programs and Goals
- ESG Governance Team
- Local ESG Laws
- Natural Capital
- Net Zero
- Sustainable Supply Chains
Why now?
ESG KPIs at the highest level have gone from nice-to-have to must-have. The lack of ESG initiatives can negatively impact your business because customers and investors are now choosing partners that have transparent ESG programs and hold themselves to the highest standards of accountability. A delay in putting ESG initiatives into motion may negatively impact your business. The good news is, it’s not too late to start.
How do I start?
As the saying goes, when you don’t know something, find someone who does. The first step is finding a partner who has ‘been there, done that’ for companies in similar situations. No matter who you choose as your partner, the process will probably look something like this:
- Awareness
- Set Priorities
- Assessment
- Set Goals
- Analyze Gaps
- Execution Roadmap
- Governance
- Repeat
Who can help?
Accelerate your journey by partnering with an advisor with ESG experience. Like any responsible consulting firm, we have been working on how we can help our customers stay ahead of the game. As part of our ESG practice, we have created an ecosystem of solutions, frameworks, best practices, and partners who know the problem statement well and have worked with multiple customers in creating an ESG strategy and execution roadmap.
If you feel you could benefit from an ESG discussion, reach out to us.
AMIT MAHESHWARI
Client Partner, Consumer BU
Bristlecone
