ESG Management: What to Get Right
Thursday, 9th June 2022
ESG refers to the various metrics and frameworks that investors and stakeholders use to assess a business’s social and environmental impact. While it’s not yet mandatory, compulsory ESG disclosure is on the horizon, with proposals in the US, the UK, and elsewhere to formalize reporting obligations.
Yet, for brands serious about their bottom line—and their reputation—abiding by disclosure mandates is not necessarily enough. And at the same time, just because you perform ESG reporting doesn’t mean that you’re getting it right.
In fact, effective ESG management is so much more than just fulfilling your obligations. And here, we’re taking you through some crucial ESG management strategies—and some signs that you’re not doing enough.
Let’s get started.
What is ESG?
ESG refers to how a company reports on its environmental, social, and governance (or ESG) impacts and processes. Just as companies are obliged to make annual reports on their financial performance, ESG asks that they report on environmental, social performance and governance practices too.
This data is something that investors are really interested to see. That’s because it doesn’t just show that you care about the footprint of your business. Instead, it demonstrates that you’ve considered the impact these factors can have on how your business runs.
Typically, ESG reporting involves three main parts:
Environmental. The first part of ESG disclosure considers your environmental performance. You’ll need to demonstrate the environmental impact of your processes and sites—including your carbon emissions, energy usage, and waste. But you’ll need to have a sense of how climate change or extreme weather events can impact your processes too.
Social. Alongside your ecological performance, it’s crucial to track your social ESG data too. This refers to information on the well-being of your employees, the human rights of everyone in your supply chain, and the impact you have on the wider community.
Corporate governance. Finally, the ‘G’ in ESG is about the way that your business is run, or “governance”. Do you follow best practices for transparent decision-making? Who are your board members? And how are they rewarded?
One of the difficulties with ESG for businesses is that there’s no single set of ESG standards to follow. Instead, depending on the industry in which you operate and your business’s preferences, there are many different ESG frameworks to choose from.
These include the Task Force for Climate-Related Financial Disclosure (TCFD), the Carbon Disclosure Project (CDP), or the Global Reporting Initiative (GRI), for example. These will have different reporting requirements that you will need to account for in your ESG management.
However, it is essential to recognize that these frameworks are widely different from each other as they encompass various factors that will ultimately be used for different purposes. These factors tend to focus on the inputs and outputs of a building such as occupancy, health and energy management.
Understanding these frameworks and how they align with your ESG goals would be the key to selecting a suitable framework but also how to implement a successful ESG strategy. ESG covers the whole sustainability and social spectrum.
Why get your ESG management right
If ESG management sounds complex, that’s because in reality, it is. However, with the proper support, you’ll be able to streamline the data collection process, get a clear view of your ESG performance, and drive continuous improvement.
Below, we’ll show you how we at Infogrid can help.
But first, let’s talk about why an effective ESG program is worth your time.
Prove you’re serious about a sustainable future. Investors, customers, staff, and the wider world increasingly value sustainable business processes. But ESG goes one step further. Rather than just saying you are sustainable, ESG helps you prove it.
Secure investment. Studies have shown that 85% of investors consider ESG factors in their investment decisions. ESG is not just about caring about the environment. It shows that you can provide a complete view of your risk management processes too.
Attract staff who share your values. A large proportion of staff now prefer to work in an ESG workplace. In fact, research conducted by Morgan Lovell shows that 62% of employees would be more likely to move to a company that has committed to ESG.
It may soon be mandatory. The decision of whether to report on your environmental risks and corporate social responsibility may quickly be out of your hands. Across the world, legislation is being formalized to enshrine ESG disclosure requirements into law.
In this context, you can’t afford not to pay close attention to your ESG management processes. But how do you get started?
The fundamentals of your ESG strategy
ESG is not a one-time task. But nor is the process the same for every industry and territory in which you operate.
Here are seven steps you need to follow to get you moving.
Understand the regulation. ESG success starts with knowing your obligations—but these change dramatically depending on where you operate. For example, in France, companies operating in spaces over 1,000 square meters must declare their carbon emissions. Meanwhile, in the US, plans are being developed to oblige publicly traded companies to make disclosures in line with TCFD recommendations. Knowing what you need to do and when is your first step.
Set goals. What do you want to achieve with your ESG program? Just as you set financial goals, environmental and social performance goals will focus your performance and maintain motivation among your teams.
Get buy-in from across the organization. It’s a common mistake to hire an environmental officer and think that ESG needs are accounted for. But ESG management is a lot more than that. To drive ESG success, it should be embedded deeply into your organization—and affect the way that everyone behaves.
Invest in support that makes monitoring easy. You don’t need to struggle with data collection, validation, and reporting all by yourself. With solutions out there that can automate much of the process, you’d be holding your business back by doing it manually.
Infogrid can make monitoring your environmental performance simple. By collecting data on energy use, greenhouse gas emissions, water waste, and indoor air quality, you can track your ESG progress without lifting a finger.
Validate your data. Raw data is often not very useful all by itself. Before you make your ESG disclosures, you’ll need to ensure that it is correct, valid, and formatted correctly. At Infogrid, we can help with this too.
Show progress and future—not just raw data. Often, investors want to see how your climate-related performance is having an impact on your wider business growth. This shows them that you’re aware of the risks and opportunities associated with your social and environmental performance.
Keep monitoring and improving. ESG doesn’t stop there. You’ll want to improve your climate-related performance into the future, by acting on opportunities for more efficient processes, a more sustainable built environment, and happier staff.
Infogrid can help you identify these opportunities by providing actionable real-time insights into your building health.
4 ESG management mistakes
With your ESG management processes now in place, you’re halfway there. But it’s not all plain sailing from here. Here are four common ESG mistakes you should avoid:
You focus solely on your obligations. You should do everything possible to comply with relevant disclosure mandates. But for businesses that really want to make a difference—and prove that they’re ESG leaders—you need to go above and beyond. Why not strive to be a net-zero workplace? Recent Infogrid research found that 40% of employees would be more likely to stay at a company with a net-zero strategy.
You’re not linking ESG to your wider business. Sometimes businesses treat their ESG operations as if they’re completely removed from all of the other processes, values, systems, and goals that they hold. This is to miss the point completely. ESG should not be just a box to tick or an obligation to fulfil.
You use ESG as a marketing strategy. There’s a word for companies that talk the talk but fail to walk the walk when it comes to environmental issues: greenwashing. If you’re spending more time communicating how sustainable you are than putting the steps in place to prove it, investors and customers will see through it.
You don’t have the tools in place to make it easy. ESG management starts with data collection—on your environmental footprint, employee well-being, labor rights, and the integrity of your processes. To do that by yourself can be tough, time-consuming, and it can produce unreliable results.
Instead, invest in tools like Infogrid to simplify, automate, and validate your data collection process. Here’s how we can help
Trust Infogrid to help you achieve your ESG goals
We can help you do right by your staff, investors, and the planet. We can support you through:
Monitoring. Our Efficient and Sustainable Building System allows you to receive live data on your buildings’ environmental performance and the impact it’s having on your employee health and happiness.
Validation. Infogrid’s system presents insights on your building health on a clear, intuitive data dashboard, so you can trust it is valid and error-free.
Reporting support. We’ll be there every step of the way to ensure that you’re fulfilling your obligations, no matter which ESG framework you are using.
