What are the ways to improve an organization’s ESG performance?
- Cut back on resource consumption and emission
- Check-in with your employees
- Share your governance principles
ESG stands for Environmental, Social, and Governance. It is a holistic framework that recognizes that sustainability and ethical impact goes beyond environmental matters. An ESG framework includes elements around environmental aspects as well as social and governance structures that can be designed to maximize stakeholder value. Learning about the different ways to improve organization ESG performance is important, especially in the wake of the COVID-19 pandemic.
The benefits of having a strong ESG platform are numerous. Business owners get to improve the quality of life in the communities where they are operating in. Operating more sustainably also facilitates top-line growth, leads to cost reduction, attracts talents, boosts productivity, reduces regulatory interventions, and forges an increased sense of consumer trust. Overall, ESG equips a business to become more successful and resilient in the long term. Most investors also have an ESG criterion when screening investments.
Nowadays, companies in any sector are pressured to respond to environmental, social, and governance (ESG) concerns. However, those who already invested in ESG programs are wondering how to further improve their performance. In this article, we discuss recommendations to boost your organization’s ESG performance based on the different elements:
The “E” in ESG looks into the environmental impact of any organization’s resource and energy consumption. This includes discharged wastewater, greenhouse gasses and carbon emissions production, pollution, treatment of animals, and energy utilization, among others. Environmental factors are often one of the first ESG issues people think of.
Under this criterion, a company must perform as a steward of nature. The rise of conscious consumerism resulted in businesses investing in climate action. Especially in a circular economy, an organization’s impact on the environment and what they do to protect it must be tackled.
Cut Back on Resource Consumption and Emissions
Perhaps your organization already adopts several carbon neutral solutions, or your goods are produced with recyclable materials. Part of improving your organization’s ESG performance, however, is constantly looking for ways for your operations to run sustainably.
Check if your organization can cut back on resource consumption and emissions. Think of areas you might have not considered before such as reducing the organization’s emissions from employees’ commute to work by offering shuttle services, switching to renewable energy, tracking the lifespan of goods, and finding better strategies to recycle them.
Have a sustainable supply chain and make sustainability a goal with all your suppliers. Work together towards eliminating dead mileage by making sure every delivery fleet returns to base with raw materials as well. This can help mitigate fuel emissions.
The “S” in ESG does not talk about the culture within your company’s walls alone. It looks into how your organization forms relationships with the people and institutions in the communities where they operate in. Examples of factors that are measured under the Social pillar of ESG include labor relations, diversity, employee health and safety, and training and development, among others. For instance, does your organization do charitable acts to serve the local community or encourage employees to volunteer? Does your organization highly regard employee health and safety?
Check In With Your Employees
Your employees play a crucial role in improving the organization’s overall ESG performance — from ensuring sustainable day-to-day operations to helping shape your ESG goals.
- What your employees want – Even if your company thrives when holding in-person meetings, check if there is room to allow work-from-home settings for several days a week
- Ethical principles in the company – Check whether both headquarter office worker and factory overseas workers are being paid competitive, fair wages
- Additional benefits – Check if there are additional benefits your organization can offer such as mental health days or monthly compensated lunch
The “G” in ESG looks into the internal policies, practices, and procedures that your organization adapts to govern itself, comply with the law, and make decisions. This includes factors like performing audits and steering clear of unethical practices and influences.
Share Your Governance Principles
Most investors use an ESG criterion to make responsible investment decisions. And the Governance element is heavily focused on ethics and principles. When you set ethical standards internally, it sends a clear message to investors, regulatory bodies, and other key stakeholders that you have strong governance principles.
To further improve your organization’s ESG performance, share your governance principles. You can be a business owner that pushes everyone to maximize sustainability and stakeholder value as well.
Extend your reach to:
- Supply Chain Partners – From farmers that source raw materials to your suppliers — you can create a program to share governance principles with every key member in the supply chain. Ask them to develop their ESG principles to align with yours.
- Investors and Board Members – Ensure your investors and board members are on board with your ESG principles.
ESG principles should be at the core of your organization. However, they are only as valuable as far as your organization practices sustainably. When your strategies improve your company’s ESG, every stakeholder benefits and in this article, we have listed some of the ways to improve your organization’s ESG performance.
Learn how Science Park of the Philippines (SPPI) can help with improving your ESG performance! Click here to get in touch with SPPI.