What is ESG?
ESG or Environmental, Social and Governance, is a framework stakeholders use to evaluate an organization’s risks and opportunities related to environmental, social, and governance factors. Examples of these ESG factors include quantifying the carbon footprint of an organization and natural resource usage, assessing a corporation and its supply chain for labor rights concerns, and ensuring the entity is structured to prevent corruption. Because corporations are encouraged to look at these ESG factors through an organization’s financial interests, ESG is framed in the context of corporate financial strength. This is a growing area of importance, with stakeholders considering investment decisions. Aligning investment decisions with one’s values is a trend that has taken off and isn’t slowing down. As our world is starting to feel the effects of climate change, environmental considerations are becoming a significant factor in investment decisions as they represent corporate risk. Providing data in this area has never been more critical than it is now.
Considering ESG matters can take shape in numerous ways within an organization, many are starting to prepare annual sustainability reports which collect and synthesize data on emissions and evaluate social ethics indicators. These reports can assess material sustainability-related risks and help identify sustainability-related opportunities.
How can we help?
BBJ Group’s ESG Practice also covers the following services:
- Sustainability calculations and reporting
Developing reports using sound analyses allows clients to have specific information on their organization’s ESG data and allows them to provide their investors with clear, valuable information. Having this information is crucial in setting attainable goals for ESG areas for the future and keeping stakeholders informed and engaged.
- Creating customizable tools for ESG data collection
Having a custom data collection plan is essential in ESG as each corporation or organization is unique concerning individual corporate goals, countries and jurisdictions of operation, industry standards and practices, and culture.
- Data interpretation, visualization, and presentation
The bedrock of a good ESG Program is the development of a solid database or information. How hefty datasets are presented to investors, stakeholders, and corporate boards ensures they will be consumable and usable. Individual data points are good, but stakeholders want to see trends.
- Inclusion of ESG considerations during real-estate transactions or mergers and acquisitions
Similar to more traditional environmental compliance, corporations need to know how an acquisition will impact their broader ESG portfolio. Identifying growth opportunities early is essential when setting near-term and long-term strategies.
- Designing and implementing decarbonization strategies
Greenhouse gas emissions from large organizations tend to cluster around specific operations and processes or whole subsidiaries. Identifying the ‘hot spots’ through data analysis allows for targeted and efficient reduction plans to meet stakeholder decarbonization goals sooner.
- Guidance and training on reporting standards such as GRI and SASB
As the ESG space rapidly develops, many site or plant managers have expressed feeling overwhelmed at how to best respond to information requests coming from corporate management. Guidance and training on these reporting standards help managers navigate these developments.
- Supplier assessments and on-site audits
Because ESG goes beyond the four walls of a facility, those preparing ESG reports rely heavily on data and information shared by those within their supply chain. Particularly regarding labor ethics, simply asking suppliers to verify certain statements are true may no longer be enough assurance. Some of the most proactive ESG reporters have begun conducting on-site audits of leading suppliers, and this practice is expected to continue and grow.
- Human right assessments
Large jurisdictions such as Europe and California already require corporations to assess their operations and their supply lines for human trafficking and other labor ethics violations. A sometimes-overlooked aspect of ESG, human rights issues can potentially expose an organization to significant fines and penalties, significantly damage a brand's reputation, and make it challenging to raise future capital.
- Assistance with verification organizations such as SBTi
Stakeholders want to know that a corporation is not just talking the talk but that they are walking the walk. Independent verification organizations review an organization’s carbon reduction history to ensure they are on target to meet their goals and objectives.