Article
Jump-start your sustainability road map with an ESG maturity assessment
Understand where you are to explore where you want to be
Dec. 20, 2022 · Authored by Ed Mahon, Annelise Gerschke
As investors, consumers and legislation continue to place greater value and scrutiny on an organization’s environmental, social and governance (ESG) practices, organization leaders will face increased pressure to develop or evolve their ESG strategies. But before an organization can more purposefully integrate ESG into their business strategy, they must understand where they are today.
Through an ESG maturity assessment, organizations can better recognize strengths and areas of opportunity to create ESG programs that align closely to their strategy, culture and overall business goals. Evolving your strategy to reach your intended sustainability goals takes time but understanding where your organization stands will fuel the development of a strategic and intentional road map for the future.
Where do you think you are?
Using an ESG maturity assessment, organizations obtain a view into their current state and a baseline for measuring progress. With respect to environmental, social, governance, and general organization topics, the current state maturity of an organization can be assessed against four levels of maturity – initial, growth, operational and transformational.
Review the maturity level characteristics:
- Lack of analysis on whether environmental or social sustainability is a risk to the business or its stakeholders
- Defined ESG-related elements are not incorporated into strategic priorities
- ESG initiatives are viewed as too costly and/or unable to provide value to the organization
- Activities are driven by regulatory compliance only and ESG-related reporting and disclosure are minimal
- Organization strategy has defined ESG-related elements or an ESG strategy
- Taking action is recognized as a requirement to address ESG-related activities, risks and opportunities
- ESG initiatives are viewed as an investment in the organization that can create value
- ESG-related reporting and disclosure are completed infrequently or ad-hoc
- ESG sustainability is viewed as an important part of the business and its success
- Execution of the ESG strategy and related activities has begun
- Data management processes have been developed to measure the progress of those activities
- All ESG-related reporting and disclosure are completed annually (internally or at request by external parties)
- Organization embodies ESG-related activities that align with its strategy, culture and business plan
- The robust risk management processes include the assessment of ESG-related risks and opportunities
- Organization business models can adapt to a changing landscape
- ESG-related activities are communicated to the board and the executive leadership team regularly
- ESG-related reporting and disclosure is comprehensive and completed annually (internal/external), and external assurance is performed
Learn more about each component of ESG maturity and important questions to consider
An organization’s level of maturity, in its present or future state, will depend on its goals and priorities. To better assess an organization’s current state, we explore maturity in four categories: environmental, social, governance and general organization. This deeper dive provides an organization with the versatility to identify and prioritize those categories where evolution is required.
Key components of general organization maturity include business strategy alignment, leadership support and executive accountability, organizational readiness and adoption, resource commitment, and stakeholder and resource engagement.
Questions to consider:
- What are the core values of the organization? Is there alignment with ESG/sustainability?
- Do the organization’s leaders recognize the importance of ESG priorities and activities? Do executives have goals and KPIs tied to the organization’s ESG performance?
- Has the organization considered communications, training and possible incentive structure to drive ESG adoption?
- Is the organization sharing transparent and accurate ESG-related data and information internally and externally?
Key components include greenhouse gas (GHG) emissions, energy management, waste and hazardous materials management, water and wastewater management, air quality and materials efficiency.
Questions to consider:
- Is the organization tracking any energy, waste or hazardous materials, water and wastewater, or air quality metrics?
- Does the organization track GHG data for scope 1, 2 and/or 3 emissions? Are internal controls in place to manage GHG data quality?
- Does the organization have environmental goals and plans in place to achieve them?
- Has the organization established owners of environmental data?
Key components include workforce health and safety, labor practices, employee engagement and development, diversity, equity and inclusion, human rights and community relations and product quality and safety.
Questions to consider:
- How does the organization attract and retain talent? Are there employee development programs in place?
- What initiatives, tracking and training programs does the organization have in place on worker’s health and safety?
- Are there organizational policies that provide insight on standard basic workers’ rights, labor standards and minimum wage?
- What programs are in place to support diversity, equity and inclusion (DEI)? Is the organization tracking DEI metrics?
- Is the organization aware of and managing the direct and indirect impacts the business has on their community?
Key components include corporate governance, supply chain management, product design and lifecycle management, business ethics, competitive behavior and data privacy and cybersecurity.
Questions to consider:
- Does the organization have policies related to suppliers, cybersecurity, vendor management, supply chain, purchasing, employee-related missions, compensation and/or incentives?
- Is there a board committee(s) responsible for ESG matters?
- Does the organization have a sustainable and ethical sourcing strategy?
- How are business ethics integrated into the organization’s values?
- Are internal controls designed to mitigate data privacy and cybersecurity risks? Are said controls regularly tested?
Think big, start small and scale up quickly
Contact usAccurately assessing your organization’s current state maturity requires input from various stakeholders and detailed examination of your organization’s current ESG disclosure, risk management processes, policies and goals. This exercise is critical and aids in uncovering an organization’s strengths and improvement opportunities.
For clients, we use our findings from the maturity assessment to build a phased activity road map across each of the four categories and their associated desired level of maturity. In alignment with an organization’s core values and goals, our specialists can provide holistic and tactical plans to get your organization where you want to be. We’re eager to meet you where you are and get started.
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