5 essentials for a successful ESG maturity assessment
The wait for better alignment in ESG assessments continues. Although some progress has been made – such as the commitment from five global standard-setters and the establishment of the Value Reporting Foundation to guide the journey towards comprehensive and transparent sustainability measurement and disclosure, there is still a long way to go. Whether to encourage clear and simple corporate reporting or to assist investors in considering ESG issues, no framework has yet established a standard practice, leaving the matter to individual choice.
ESG themes increasingly influence the agendas of asset managers, banks, insurers, rating agencies, proxy advisors, regulators and NGOs, and as its prominence has grown, so too has the focus on robustness, resilience and integrated management of ESG issues.
With multiple ESG frameworks unable to work as harmoniously as possible, companies find themselves following somewhat conflicting objectives under disjointed definitions – which leads to confusion and sometime ignorance of what is material to their own business.
Organisations are overwhelmed by extensive reporting requirements from investors, changing consumer preferences, sharpening regulatory pressure and straight-talking NGOs increasingly demanding improvements in governance. On top of this stands the mounting global environmental and societal challenges…
In a rush to keep up with the ESG revolution, companies burnish their ESG credentials to produce impeccable sustainability reports that exhaust internal resources every reporting season, often struggling to find the time to take stock of what is truly material. Increasing competition makes it challenging to find the time for taking a step back and honestly assessing internal practices, systems and controls.
An honest appraisal of how ESG affects strategy, performance, governance, and how it can contribute to business growth, is the first fundamental step to define what truly matters for future success.
As part of our ambition to help businesses navigate the challenging and ever changing ESG landscape, we have launched ESGOptic – a new digital tool that instantly measures how organisations are performing in relation to ESG requirements expected from all key stakeholders.
Self-assessment is essential for identifying where to focus sustainability efforts and how to better integrate ESG into business strategy, risk management and corporate culture, and build a stronger relationship between sustainability, operational and financial resilience.
ESGOptic guides you on how to seal your gaps and further build on your strengths, in line with business and stakeholders’ needs, market dynamics, and other critical factors that can make or break your capability profile.
It is built around the following five essentials of a successful evaluation that we suggest companies use to define their ESG maturity:
The level of sustainability integration into business strategy and objectives
The needed internal controls and systems for sufficient oversight of ESG management
Progress on mitigation of potential ESG risks and use of emerging opportunities
Gap areas in stakeholder management
Quality of ESG communication, reporting and level of transparency.
Whether it is a “doing minimum and nothing wrong” approach, or “doing more than the average”, companies – regardless of their ESG ambitions – do have wiggle room to influence perception. No matter how complex, changeable and multifaceted the world of ESG is, there is way to make it work for you as a competitive advantage and a lever that turns risk into opportunity. But it is important to act quickly and start with a frank assessment of strengths and weaknesses to be able to address complex challenges in a more sustainable and purposeful way.
Find out more from Helen Dodd, our Head of Reinventing Responsibility.