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Environmental, Social and Governance (ESG)

Environmental, Social and Governance or ESG are a set of standards for company operations and is a measure of an organisation’s awareness of social and environmental factors which are now becoming criteria used by many socially conscious investors. It can be thought of as a form of corporate social credit score and considers various factors from the Environmental, Social and Governance fields such as:

Environmental

Waste and pollution
Deforestation
Climate change
Resource depletion

Social

Conflict
Health and Safety
Employee relations & diversity
Working conditions
Local communities

Governance

Board compensation, diversity and structure
Tax strategy
Executive pay
Corruption
Political affiliations and donations

This short video gives an insight into ESG and why it is gaining interest.

This is now becoming more important for every organisation and can certainly add creditability and weight to a company’s reputation which can help to give an edge in an increasingly competitive market.

Investors in recent years have shown interest in putting their money where their interests are aligned and as a result, brokerage firms and mutual fund companies have started offering Exchange Traded Funds (ETF’s) and other financial products that follow ESG criteria. This is often referred to as sustainable or socially responsible investing and to assess a company based on ESG criteria, investors will look at a broad range of behaviours.

Benefits
Some of the benefits that an organisation will realise from implementing ESG initiatives include:

Improving environmental performance
The environment is of course a huge concern at the moment, and by taking steps to reduce its environmental impact by e.g. using renewable energy a company can reduce its operating costs such as heating and lighting while also making a commitment to an increasingly important global issue.

Managing risk
ESG risk management encourages organisations to put appropriate controls in place and to ensure accuracy and transparency in their communications. This in turn results in the company being in a better position to respond quickly to threats and prepare for any regulatory changes that may happen.

Improving people relationships
One of the most important benefits, taking a positive stance on ESG is often perceived as an organisation ‘giving back’ and this can be hugely motivating for the employees. As well as this, the specific aspects of ESG risk management have a direct impact on the employees working conditions such as working hours, health and safety and staff treatment and diversity, all of which improves the working life of the employee. A happier workforce is always a more productive workforce.

Regulatory compliance and transparency
As the industry regulations (as well as Stakeholder requirements) surrounding ESG demand that organisations are accountable and more transparent throughout their entire business activity then it can be expected that businesses will have to report on all ESG issues. This should mean that processes are put in place that makes reporting such information to the correct governing bodies as seamless as possible and this, in turn, will help to ensure regulatory compliance and minimise the requirement for legal intervention.

Vassallo Associates can offer consultancy services to help an organisation with its ESG goals, these services are categorised in line with the 3 specific areas of the ESG shown in the 3 columns above.

Environmental
ISO 14001 Environmental Management
ISO 50001 Energy Management

Social
ISO 45001 Occupational Health & Safety Management
ISO 2600 Social Responsibility

Governance
ISO 37001 Anti-Bribery Management

By utilising our consultancy services, you can bring your company in line with the ESG criteria that is now becoming so important for companies to stand out from the crowd and strengthen their investment potential as well as aligning with the UN’s Sustainable Development Goals. We can help with understanding how to see the improvement by putting in place and monitoring your ESG metrics.

esg
As the environment becomes an increasingly more important topic, any organisation that is implementing ESG policies will have a stronger reputation.

Contact us now to arrange a pro bono (no obligation) consultation to discuss your requirements.