Starting your ESG and sustainability journey

Organizations see many benefits to having an environmental, social and governance (ESG) and sustainability programs. These programs can be utilized to achieve operational cost savings, brand recognition and supply chain optimization if implemented effectively.

ESG is not a new concept – many aspects of it are already embedded in a lot of what companies do day-to-day. What is new is compiling the many aspects of it together and consistently reporting on it. This allows for transparency and comparability between companies and what they’re reporting.

Every company is on a journey with its ESG and sustainability goals, though some may find it challenging to evaluate where to start on these initiatives to provide their company value. These are the steps companies tend to follow on their journeys.

Reporting

1. Awareness and education – Before crafting a strategy or program, a company must have insight and awareness of the ESG and sustainability landscape. This is where they start to understand what’s important when it comes to ESG and sustainability, how to evaluate these different initiatives and how to develop the strategy to incorporate them within their organization.
2. Strategy development and refinement – Once a company has the proper awareness and education, it should develop a strategy that is aligned with its business objectives. They should understand and be able to articulate how ESG initiatives align with the business strategy and how Inflation Reduction Act (IRA) tax credits can be utilized to deploy some of these strategies.
3. Reporting preparation – Whether ESG reporting is voluntary or required, organizations must develop or refine reporting processes to support their disclosure requirements. This could be as simple as greenhouse gas emissions reporting or as specific as metrics around certain social or governance pieces of their strategy.

Assurance

1. Assurance readiness – Organizations must prepare for assurance by identifying, designing and implementing processes and controls over sustainability reporting. They should be confident in their reporting processes.
2. ESG and sustainability assurance – Regulations require assurance over ESG and sustainability disclosures from limited to reasonable assurance levels. Public disclosures can be key in marketplace positioning and can serve to provide confidence to those who are looking at these metrics and comparing them to other organizations.

Strategy

1. Targets and goals – Once a company has established a reporting baseline, goals and targets can be evaluated and developed. Overall reporting for those goals like key performance indicators (KPIs), allows the organization to communicate its progress and outline how it intends to move forward to continue to meet those goals and targets.
2. Decarbonization strategy – Organizations are encountering increased pressures to deploy renewable energy transition strategies and meet established targets and goals. This is where utilizing the Inflation Reduction Act (IRA) for tax credits could be beneficial in offsetting the initial costs of these new strategies.
3. Technology implementation – To streamline reporting processes and optimize data management, organizations may implement ESG and sustainability reporting software.

If your organization is looking to begin its ESG and sustainability journey, these are our recommended steps for getting started.

1. Review your company’s current sustainability initiatives, reporting and related strategic priorities.
2. Understand your key stakeholders and what ESG information they might need. There might be applicable requirements for reporting such as the EU, SEC or state requirements to consider.
3. Determine how ESG will impact both short-term and long-term business decisions. Where is the organization going and how will ESG and sustainability considerations be built into the business strategy moving forward?
4. Develop procedures for gathering ESG information to communicate to your stakeholders.
5. Develop an internal ESG policy or draft report.
6. Monitor the ESG landscape and changes in frameworks, standards and regulations.