Take a proactive approach to the E in ESG.
Shareholder activism around environmental responsibility has been growing steadily for several years now. While companies have previously responded to activist shareholder demands in loose commitments with few hard measures, this is changing rapidly as investors, customers, employees and now regulators demand increased commitment and transparency about environmental impact. There is now evidence that when CFOs think like activist investors, they can add 2.5 percentage points to economic value added in comparison to peers that take a purely reactive approach.
With Environmental impacts – from greenhouse gas emissions to waste management – taking up growing mindshare, a proactive approach means getting ahead of strengthening regulations through rigorous reporting and transparency through a connected platform.
What investors want to see
Investor expectations for Environmental programs have evolved beyond a simple demand for companies to acknowledge impacts on the environment and pledge to do something about it. With increasing awareness of greenwashing as a hollow promise, investors are demanding greater insights into Environmental data. Today, the expectation is that ESG data collection is:
- Tracked: Environmental metrics should be tracked to the most granular level possible to provide the most information for analysis.
- Transparent: To earn and build investor trust, metrics and reports should be easily assembled and readily available in official disclosures to stakeholders.
- Actionable: The metrics gathered should be deeply and frequently analyzed to produce insights that guide upcoming strategy.
Regulators are driving for transparency and accurate metrics, while investors, customers and employees want a vote on ESG posture – or they will vote with their wallets and feet.
Covering all environmental bases
Companies that want to capture the business value associated with being responsive to stakeholder demands need a platform that connects multiple sources of data and performs the following key functions.
- Maintain compliance: This is the bare minimum organizations can do to keep stakeholders happy. The platform should track and resolve environmental incidents, handle audits and automatically apply regulations and policies by location.
- Monitor performance: The solution should automatically capture metrics related to waste management, emissions, water use and other critical ESG metrics as well as analyze the data for digestible visualization of the current state of Environmental efforts.
- Build your brand: A strong platform offers features that go a step beyond, like simple management of stakeholder interactions, emissions target-setting and analytics that highlight weak points for future improvement.
The importance of connection
Environmental impact and climate-based risk management are critical elements of business resilience planning, but they can only deliver on their potential if leadership elevates it as part of a comprehensive ESG program that is top of mind in the boardroom. When metrics and data from all relevant areas are collected and aggregated, executives are empowered to drive, measure and communicate progress and everyone in the business can more easily know how they contribute to the effectiveness of Environmental efforts.
Driving real ESG progress demands that the traditional disciplines of Governance, Risk and Compliance (GRC), Environment, Health, Safety & Sustainability (EHS&S) and Ethics and Compliance Learning harmonize and connect. This ensures that policy and compliance management, third-party risk management and business continuity planning fully intersect with the metrics management of EHS&S. The integration of Ethics & Compliance Learning can help instill an organization's Environmental concerns as a core value and ensure that policy and posture are clearly understood.
While not all organizations require an EHS&S approach to workplace management, when it comes to corporate stewardship of the Environment there are more similar goals than differences between ESG and EHS.
Making connection count
When it comes to building business value, focused attention on ESG is a must. Digitizing ESG and ensuring Environmental concerns are informed by and provide context to every relevant area of the business is key to delivering the results and communication experience stakeholders are demanding. Comprehensive, unified platforms like SAI360 leverage the connected intelligence and workflow automation needed to launch organizations of all sizes into the future of ESG and create more value than ever before.
Read more about the fundamentals of ESG:
- E – Enhancing Environmental Reporting to Create Business Value and Thrive
- S – Social Considerations in ESG Programs
- G – Governance: The Foundation of the Ethical Enterprise