The strategy for sustainable business
What is ESG strategy: Continue reading
Sustainable Development for business
Sustainable development is a movement with a certain direction towards the future. The engine behind this movement is the economy. And the workforce is the operator of that engine. In the end it is that simple. What your people do is what matters.
ESG is an helpful business strategy framework to steer business activity in the right direction with measurable results. At the same time this only works if organisational culture and skills support this direction.
Please scroll down for the exact meaning of ESG and assessment factors per element.
By doing the right things in production, procurement, sales and logistics, both responsible and profitable business can walk hand in hand. Doing things right, if not already, also means ceasing or phasing out the wrong things.
The X Curve of transformation (source: DRIFT)
Transition involves a constant interplay of creation and destruction. It's about building up new, sustainable ways of doing things while simultaneously breaking down old, harmful practices. Every transition has patterns of destruction and patterns of creation. The patterns of creation focus on developing new ways of thinking, working, and organising.
PHASE IN
Building up new activities and practises can start small. It is import to have some small but quick wins to engage colleagues. At the same time you want to avoid negative energy as much as possible. so doing new things should go at the expense of old ways.
PHASE OUT
Without a proper phase out plan of old ways, there will not be enough space for new activities without increasing the work pressure. Building up and breaking down activities can be planned around some balance. The ESG framework in combination with the predictive value of your company's data is the best guide for strategy and transformation.
ESG strategy framework in a nutshell
At ESG Mission Guide we believe it is important to see ESG as a strategy to uncover opportunity and not as a threat or obstacle. Hence we've created this easy overview of the ESG main topics which helps to guide you in the solutions space. The circular economy, (bio)diversity, your workforce and your end-users are in the solutions space. A strategy that focusses on these positives will mitigate or even avoid the risks at the same time.
The ESG strategy framework in detail
E = ENVIRONMENT
The Environmental factors assess a company's impact on the planet. This includes aspects like energy consumption, greenhouse gas emissions, pollution and waste management, resource usage, and strategies for mitigating climate change.
- Energy usage and efficiency: This includes a company's consumption of different energy sources (fossil fuels, renewables) and their efforts to reduce consumption or switch to cleaner sources.
- Greenhouse gas emissions (GHG): Companies report their total GHG emissions and efforts to reduce them.
- Pollution and waste management: This covers a company's waste generation, pollution control measures, and waste disposal practices.
- Resource use and sustainability: Reports on a company's use of resources like water and raw materials, and their efforts towards sustainable practices.
- Climate change mitigation and adaptation: Companies may report on their strategies for dealing with the effects of climate change.
S = SOCIAL
The Social factors examine a company's relationship with its workforce, stakeholders, and the community. This covers areas like diversity, equity, and inclusion, labor practices, human rights, community engagement, and product safety.
- Diversity, equity, and inclusion (DE&I): This covers a company's workforce demographics, equal opportunity practices, and efforts to promote diversity and inclusion.
- Labor practices: This includes aspects like employee wages, benefits, working conditions, health and safety practices, and collective bargaining rights.
- Human rights: Companies may report on their efforts to uphold human rights throughout their operations and supply chain.
- Community engagement: This covers a company's involvement with the communities it operates in, such as charitable giving and social responsibility initiatives.
- Product safety and quality: Companies report on their commitment to product safety and responsible production practices.
G = GOVERNANCE
The Governance factors focus on a company's leadership, ethics, and risk management practices. This includes the composition of the board, executive compensation, risk management strategies, commitment to business ethics and anti-corruption measures, compliance with regulations, and transparency in reporting.
- Corporate leadership and board structure: This includes information on the composition of the board of directors, executive compensation, and diversity among leadership.
- Risk management: Companies report on their risk management strategies for various ESG factors.
- Business ethics and anti-corruption: This covers a company's commitment to ethical business practices and measures to prevent corruption.
- Compliance and legal issues: Companies report on their compliance with relevant environmental, social, and governance regulations.
- Transparency and disclosure: This refers to the company's openness in reporting on ESG performance.
What's next: CSRD
The Corporate Sustainability Reporting Directive (CSRD) is the main driver for ESG reporting in the EU. It applies to a broader range of companies compared to previous regulations and mandates more comprehensive reporting on ESG factors.
CSRD implies that your organisation has to start reporting to the EU in 2025 over the current year 2024.
