ESG criteria refer to the set of standards a business uses for its operations. Having them publicly available in your disclosures and annual reports is crucial as many socially conscious investors look to ESG initiatives as they screen potential investment opportunities.

It’s more important than ever to stay on top of it as employees, customers, and investors are paying attention to companies’ strategies, ESG performance, and practices when deciding who to conduct business with, partner with, or invest with.

In today’s environment, it’s no longer acceptable for businesses to passively address their Environmental, Social, and Governance (ESG) strategy. But when it comes to ESG, one size does not fi t all.

In order to achieve these objectives, businesses may pursue an approach focused on areas such as:
 

• Conduct a Materiality Assessment
• Establish a Baseline
• Determine Objectives and Goals
• Gap Analysis
• Develop an ESG Roadmap and Framework
• Put the Plan into Action Measure Key Performance Indicators (KPIs)
• Progress Reporting

What works for your business might not work for a competitor of yours or even a partner company so it’s key that you understand your business and its goals before you embark on your ESG journey.
 

A materiality assessment is a formal exercise designed to engage stakeholders and
find out how important specific ESG issues are to them.

This can be a survey or a workshop where the Green Team or a designated individual
will gather insights that will help you guide your strategy and communication so you
can tell a more meaningful story regarding your sustainability journey.

Materiality assessments must consider business impact as a whole including
financial, environmental and social perspectives.

Working a benchmarking exercise into your assessment is another good way to get
information on how mature ESG initiatives are among your competitors and analyse
industry opportunities and challenges.

Your materiality assessment should 

• Give you and your team an understanding of how important each ESG topic is to your business.
• Provide insight into where your business stands on specific topics in comparison to your peers and competitors.
• Guidance for emphasising topics with your annual reports and data disclosures.
• Methodical ways to define your priorities to take action including KPIs and ETAs.
• When properly executed, the materiality assessment will help validate your ESG priorities for your strategy.

If you don’t know where you are right now, how can you properly determine what you need to do and how you’re going to do it?
 
Without a proper understanding of the status quo, you won't be able to define "what good looks like".
 
You may run into issues with sustained focus or keeping your attention on the right priorities.
 
All ESG issues are important, but you can’t assign them all the same priority if you want to make real progress.
 
Your materiality assessment will help you determine the topics you need to prioritise, but you still have to see how well your existing programs are doing at meeting those priorities
 

• Work directly with your cross-functional shareholders in your business that have expertise in each of your priority topics.

 

• Gather information from policies, data systems, and reports first, then supplement with interviews with your internal stakeholders to get more detailed insights and information on specifics.

 
Conducting this assessment allows you to get a bird’s-eye view of your company’s current state and gauge where your ESG strategy is across the business.
 
It’s often found that silos of ESG activity are active within your business but have not been included as part of larger communication or overall strategy.
 
By getting an idea of what’s already going on with ESG at your company, you can better determine attainable goals.
 

Now that you’re aware of your baseline ESG status, it’s time to start setting your
objectives and goals so that you know how to focus your efforts moving forward.
It’s a good idea to set up topic-focused working sessions with your key stakeholders
to get them to help you in defining your strategic objectives.
 
In these sessions, you will cover:
 

• What you can maintain

 
Are there things you’re already doing well that need to be communicated or
maintained?
               
This could be something as simple as complying with applicable safety regulations
as this is considered important for the business to maintain, but not something you
would necessarily prioritise resources for in the short-term to get the greatest ESG
value. In this situation, you may decide it’s best to maintain your current efforts so
that you remain in compliance.
 

• What you can improve

 
Are there any areas where you can make smaller improvements to better align with
your competition, demonstrate your commitment to ESG, and meet expectations
from stakeholders?
 
For instance, because human rights are important to your company, you may have
internal inclusion + diversity programs but there isn’t much communication of this
fact to external audiences regarding how and why these are important for your
company. As such, a strategic objective may be to include inclusion and diversity
metrics in external reports and comms such as your website and social channels
and start setting your goals.

• What you can optimise

 
Are there any areas where you can double down on your existing effort to move
toward becoming an industry leader in ESG?
 
Maybe because climate change is an important issue to your company, you’ve
already calculated and communicated your carbon footprint and set greenhouse
gas emissions targets so you add a strategic objective to complete a full
decarbonisation plan and aim for science-based targets. Once your objectives are in place, it is time to set goals!

Goals are a wonderful way to measure the impact of your activities while also
improving company performance and positioning your company well against the
competition. Establishing public goals also ensures that stakeholders are informed
and reinforces your commitment to these ESG initiatives.

When setting goals, consider:

• What context is needed for these goals?
• How will you assess performance?
• How ambitious are you being with your target dates?
• What needs to be done either directly or indirectly?

There are no one-size-fits-all ESG goals because they need to be tailored specifically
for your business and the impact you speak to make.

It’s a good idea to set broad and aspirational goals with supporting sub-goals that
are more tactical and easily attained so that you can complete them and shorter
periods of time. Consider what your goal drivers are when you decide when and how
to communicate those goals externally.

Present a draft of your goals to your leadership team and make sure they are
onboard with your plans.

When you engage the stakeholders early in the process, you get a general idea of
the direction and support that may be required to build programs or resource
teams.

And remember, your journey is unique to you

Consider the first three steps as a health screening to get you in position for a
successful ESG sprint.

At this stage, you will work to make sure that you’re aware of all the potential issues
your business may encounter as you would try to achieve your goals.

Conduct a gap analysis between your current state and your objectives to identify
what is missing so you can plan and strategise accordingly.

Depending on where you are, your gaps may be as small as only needing to collect
additional metrics or as large as needing to set up a waste management or energy
consumption dashboard so that you can make bigger decisions moving forward.

Make it a point to understand your gaps between now and 5 years from now as this
can help you to find the level of ambition before getting to the small details.

By understanding the end result, it’s easier to realistically achieve your goals and
allows for better strategic guidance company-wide

No matter how big or small your ESG program is, it won’t withstand the test of time
without a framework that clearly outlines where your business's vision and purpose
meet your priorities.

Developing a roadmap ensures everyone remains accountable for key actions and a
compelling framework gives shareholders and stakeholders a clear picture of your
goals and strength. Now is the time to remind the overall business of your ambition
level and set a reasonable plan in motion so you can commit to it with a phased plan
that is measured at predetermined points along the way.

In order to truly embed ESG into your business practices, you will need to include
this framework and roadmap as part of your overall business strategy.

Talk with your supply chain to find out how you can work together to support each
other’s goals to add long-term value to your partnerships. Run audit and schedule
visits.

Regularly review and update your ESG strategy to ensure your company remains
aligned with business and stakeholder expectations.

This is not a one-time assessment - it's a journey, a living and breathing strategy that
you must continue to nurture if you expect it to grow.

To effectively Implement your ESG program, you must integrate ESG into your
business practices and processes, that's a fact.

You need to outline the programs that will stay in place all year so you are prepared
to deal with every project as time goes by.

Here are some best practices to implement:
 

• Identify a set of clear and measurable outcomes to define what success looks like for your business.

 

• Use centralised management systems or other data software to easily track your key metrics in performance.

 

• Set up regular communications and updates for your key stakeholders so that you are continuously updating data, evaluating goals and comparing best practices. By constantly monitoring your plans you can stay on top of adjustments that you may need to make so that you can stay on course to reach your goals.

Of course, you need corporate oversight of ESG, but it’s also important to remember
that actual progress happens on the ground, mostly driven by the Green Team.

Different groups within the business will need detailed recommendations and
guidance about how to achieve the tangible results you are looking for as you drive
accountability for the team members who are responsible for implementing the
required actions.

As with goal-setting, there isn’t a one-size-fits-all approach for ESG reporting. Regardless of the ways of working, guidance, or standards used to tell your story, the most important part of reporting is communicating the information in a clear and honest manner. To develop your report you will need to decide what you want your report to accomplish.

Ideally, this should be a combination of:

• Communicating your ESG strategy to your stakeholders while demonstrating alignment to business objectives.
• Highlighting your policies and programs that are already in place.
• Evaluating your progress and engagement in key areas Sharing organisation-specific goals and metrics.

Beyond deciding what to report, you also must think about how. You need to disclose your information clearly and honestly to ensure that you report on topics most material to your business. Because your business's key stakeholders can easily access your ESG information, consider having a PDF report available on your website
or a dedicated ESG / Sustainability landing page on your website.

Adding the information to your website signals to those interested that you are committed to your initiatives and to providing clear and timely communication. As you progress and mature through your programs, you may add key information into broader company reporting such as your annual reports, proxy reports, customer
communications, and investor presentations.

Besides external communication, you should also plan on providing regular internal updates to reinforce how important the ESG initiatives are to your business and the knowledge employee contributions toward achieving goals.