by Mehmet Çakmak
*This is a part of our ESG article series prepared in partnership with Corpera Consulting and ACE Consultancy.
As companies find ways to cope with day-to-day challenges, it is important to have an overview and create a strong ESG program framework that can resist time, investor demands and cultural changes. Being proactive in ESG factors provides time to develop more programmed strategies for ad hoc responses to current events. Today, many companies may be feeling the pressure to respond to the growing interest in environmental, social and governance (ESG) issues, or the ones who already invest in this area may be unsure about what to do to improve ESG performance. So, how can you confidently start down the sustainability path or improve your ESG score? We have 6 recommendations on how to boost your ESG performance.
1. Align ESG factors with your business strategy
The integration of environmental, social and governance (ESG) principles in your corporate strategy is no longer a should-do, but a must-do. Unless you take a position on ESG factors, you will lag behind the competition. With the rise of ESG investing and increased public pressure on all organisations to be transparent about their environmental, social and governance policies, it has become indispensable for businesses to establish an ESG strategy. But rather than reacting impulsively to external influence, it should be based on a balance between stakeholder preferences and business priorities. In short, ESG is a core element of your business strategy.
2. Conduct your materiality assessment
Investors want to know that a business is carefully investigating the issues that will have the most impact on its finances and the sustainability of its operations. Therefore, a materiality analysis whenever possible should be conducted firstly. Materiality is the factor that allows companies to choose the issues to be included in non-financial reporting by promoting the expectations of all stakeholders. You can start by understanding where your business can have the most impact on its employees, communities, and the environmental and social systems that surround it. Each business and industry have its own set of material matters. Each business should identify what is important to its business according to its industry, culture, values, stakeholders, and business model.
3. Align with global & regulatory frameworks
The use of global standards is essential to provide more consistent, transparent, and credible information to investors. Many organisations consider that following an accredited framework will mentor them in designing a more strategic approach to ESG, whilst also assist to shape the narrative in a format that investors and other stakeholders will recognize.
4. Develop an ESG-oriented culture within the organization
When ESG reports are determined by senior management, they evolve as a requirement to ensure that they are propagated throughout the organization and that each employee is aware of them. Research shows that in firms where employees feel highly motivated, communication, recognition, and management of ESG challenges are likely to be far more efficient. That’s to say, integrating ESG practices into your corporate culture makes everything easier for your company.
5. Ensure effective communication channels
Effective communication with internal and external stakeholders is essential to understanding the company’s engagement to long-term value creation and develop a shared understanding with stakeholders about a company’s ESG strategy and inclination. In this sense, publicly open disclosures and reports are the most efficient communication tools of your dialogue with investors and stakeholders.
6. Put ESG at the core of your business
Investors and stakeholders are always on the lookout for your ESG scores. That’s why your score should be front and centre in everything you do. To boost your ESG rating, you first must grasp where you are succeeding and what needs to be strengthened. Through sustained and in-depth evaluation, you can improve your performance, improve your ESG rating and share the most important data for your investors.
We hope these six steps will give you the confidence to get started on your ESG journey or help to boost your ESG performance. We will explore working with materiality assessment in our next article.
Corpera Consulting and ACE Consultancy has a strategic ESG consultancy partnership. With Corpera’s industry leading social and governance management consultancy and ACE’s world-class environmental consulting services, we offer unique, all-encompassing solutions for investors and issuers navigating the intricacies of ESG consultancy.