Aug 21, 2023
ESG the new norm
ESG (Environmental, Social and Governance) defined by Gartner says that it “refers to a collection of corporate performance evaluation criteria that assess the robustness of a company’s governance mechanisms and its ability to effectively manage its environmental and social impacts” In other words ESG takes an all-inclusive approach that sustainability goes above and beyond environmental issues including climate change
Environment
- Corporate responsibility
- Renewable fuels
- Greenhouse Gas (GHS) Emissions
- Water management
- Recycling
- Climate Risk
- Energy efficiency
- Environmental certification
- Waste Management
- Identification of environmental risk
Social
- Labor standards
- Health & Safety
- Customer & Quality
- Working conditions
- Human Rights
- Impact on local communities
- Diversity and Inclusion
- Data Security & Privacy
- Collective bargaining
Governance
- Ethical sourcing
- Policy to prevent corruption
- Board diversity & governance
- Policy for anti-bribery
- Stakeholder engagement
- Shareholder rights
- Whistle blower system
What is fuelling this change?
Sustainable funds and investors (in other words ESG funds and investors) had enormous success in 2021. Investors poured nearly $70 billion into sustainable funds, and returns generally outpaced those of conventional funds - (Source: Morning Star)
That is a really impressive growth!
Lets' see what are the driving factors from behind
1
Cop 26 effect: USA and EU have pledged to reduce methane (GHG) emissions by 30% by 2030 to tackle adverse climate change. This will lead to nationwide regulations which will have to be adopted by Companies.
2
Companies with strong ESG performance have demonstrated higher returns on their investments, lower risks and better resiliency during a crisis. This leads to greater business transparency
3
Generation Y and Z demand that businesses pour back to the local communities rather than just focusing on their net profit.
4
The effects of the COVID-19 pandemic have furthered ESG as a long term initiative.
5
Social injustice at workplace and local communities
6
Investor & Banking alliances on sustainability and net-zero
How does this add value to any business?
-
Improve your company’s brand value which will attract more potential stakeholders for investment and gain Customer Trust overtime
-
Lower risks and get through any crisis with ease
-
Increase in revenue – Many customers would rather purchase eco-friendly products but do not know from where they can be purchased. (Green Print Survey)
-
Reduce Cost overtime –Companies that use sustainable methods for production of goods will eventually reduce cost of production and be effective overtime
-
Effectively manage newer regulations
-
Achieve employee satisfaction and attract prospective employees.
All said and done! We are here to help you implement ESG
An ESG strategy is a strategy that integrates environmental, social and governance issues into the portfolio management process
- Conduct a materiality Assessment, that is identify and prioritize what Environment, Social and Governance issue could impact the business
- Understand the current state by collaborating with stakeholders
- Define your goals
- Set up action plan
- Identify key performance indicators
- Generate Reports
How APA comes into the ESG strategic implementation!
We understand that implementation can be long and hard, that is why we are here to give you our helping hand! …
1
Awareness Creation – Help you better understand how to build and sustain long-term value in this fast changing world; by managing the risks and opportunities associated with the changes.
2
Interacting with Auditees - Work with your auditees and stakeholders to gather relevant information against each ESG criteria which in turn further align your goals to ESG standards and frameworks.
3
Question Bank (Custom, GRI, TCFD) - We will work alongside to categorize ESG issues to prepare a standardized information.
4
Creating Metrics – Identify key performance indicators including climate metrics that help define achievement of objectives for generating standard reports for the ESG committee
5
GHG scope 1 and Scope 2 calculation guidance
6
Ongoing support and technology to comply with evolving ESG regulations
