The ESG Roadmap: From initial setup to sustained impact and compliance

The emergence of environmental, social, and governance (ESG) criteria has left employees, investors, and customers growing increasingly concerned with how corporations evaluate the sustainability and ethical impact of investments. With ESG fast becoming a standard in business operations, companies are realizing how they assess their success beyond profit and sales.

Like most causes in life and business, the first step towards an enterprise’s ESG journey is always the hardest. This is because companies and their owners are uncertain about the standard and how it can become beneficial to their businesses in the short and long term.

While their frameworks vary depending on global financial institutions, ESG refers to an investing principle that prioritizes the environment, social impact, and governance at the corporate level. Some investors use these standards to screen organizations’ business practices and performance on various sustainability and ethical issues.

Some of the few benefits of adopting an ESG framework, according to online data plat-form Statista, include enhanced brand reputation; attracting and retaining clients; improved community around buildings; and cost efficiency. In addition, results from the platform indicate that 39% of investors are willing to accept a lower rate of return in exchange for ESG-related benefits.

Embracing ESG

According to global consultancy firm CapGemini, businesses looking to begin their adherence toward an ESG framework must first evaluate their companies qualitatively and quantitatively. Examining an organization’s readiness for change as well as finding out the enterprise’s emissions, wastes, and other data related to ESG are crucial initial steps.

“Once that is understood, an ambition and strategy can be created for how to stand up the program, over what timeframe and resources are required to execute a successful program,” CapGemini Sustainability Lead Greg Bentham explained on a video from the company’s YouTube channel.

Furthermore, choosing the most suitable ESG framework for a company is another way to begin integrating a standard. As some frameworks are more aligned with specific industries, selecting the right ESG criteria can provide a clearer roadmap that helps embed sustainability and ethical practices into a business strategy.

Additionally, Forbes noted that successful ESG programs “start at the top,” with leadership from the boardroom, as it helps the rest of the workforce align with their goals. Forbes also mentioned that modernizing compliance change management may help in tracking ESG regulations and help better manage risks.

Moreover, once a company has started an ESG framework, figuring out how to run the program will be essential to long-term success. Companies would have to decide how they staff the program and how they manage risks from outside factors based on the ESG framework of their business.

Integrating ESG into a business requires a strategic and all-hands-on-deck approach from the boardroom to the workforce. Through the steps mentioned above, companies can begin their journey toward becoming more sustainable and impactful.

Sustaining ESG

Organizations usually comply with their ESG through corporate social responsibilities, business strategies, or practices integrated into their core operations. To ensure that an ESG initiative not only takes root but flourishes, companies would have to check off several boxes that focus on commitments, assessments, data, and long-term strategy.

Mr. Bentham mentioned that securing the commitment of the leadership of the company in the ESG framework and investments along with continuous reinforcements to their employees can help businesses further their ESG plans.

“Furthermore, [we should engage] with the customers as to why we’re doing it so that we gain momentum and we drive accountability from stakeholders as to what we are doing,” he added.

To encourage more accountability within the business, writing an annual report to their consumers, investors, and stakeholders can be an effective way to assess where the company is at in terms of its ESG goals compared to competitors. In the Philippines, publicly listed companies (PLCs) that have a public float of at least 50% are required to submit their annual ESG reports to the Securities and Exchange Commission.

With companies such as Sustainalytics and the Asia Corporate Governance Association keeping track of the ESG scores of businesses, setting goals and milestones based on self and third-party ESG assessments will give businesses a direction to focus their attention on and build a strategy that can get their scores higher.

After receiving feedback, gaining assessments, and setting goals, setting up a long-term ESG strategy based on the data gathered will give companies actionable steps to improve their ESG performance. While compliance systems, regulations, and demands change over time, a well-structured ESG strategy ensures that companies remain adaptable and resilient.

Embarking on and sustaining an ESG initiative can be daunting at the start and difficult to maintain in the process. However, with a clear strategy, strong leadership, and ongoing commitment to sustainability and ethical leadership, companies can overcome these challenges. Ultimately, companies who have integrated ESG into the core of their operations not only ensure compliance but also drive meaningful, long-term impact and create value for all stakeholders. — Jomarc Angelo M. Corpuz