I have built every aspect of an ESG program. It took me years to pull together all the pieces. You don’t have years. These questions have become more urgent. I want to help you accelerate the process.

Today ESG is business critical for sales and revenues, and yet most executives won’t get it off the ground in 2024. Why not? Because they will spend months gathering information and trying to decide what to do. I am going to save you that time.

Below are the 8 most important elements of an ESG program. These elements are included in most ESG questionnaires, and they map to common reporting frameworks such as the Global Reporting Initiative (GRI), the Carbon Data Disclosure Project (CDP), and the UN Global Compact.

Don’t get weighed down by analysis paralysis. Start putting these elements in place today. Be sure to document them as you go in a format that can be shared with third parties.

(1) Top executive with responsibility for ESG performance

Your ESG program will not be successful without support from the top. This means that a member of the executive team must be given responsibility for directing and overseeing ESG within your organization. This executive should have the power to convene a cross-functional working group to design and implement your ESG strategy and a budget. All members of the executive team should be expected to provide the support needed from their areas for the ESG performance.

(2) Materiality assessment

A materiality assessment is a study conducted with your stakeholders (investors, clients, employees, community etc.) to identify your company’s material ESG impacts, issues, and opportunities. There are so many ESG actions you could take, and different levels of levels of attention and action could be applied to each. There is no one-size-fits-all. Your ESG approach must align with your company and your industry and be designed to deliver the most value. To do this, you need to find out what’s important to your stakeholders.

(3) ESG strategy and performance targets

Once you have identified your material issues, it’s time to set your strategy and KPIs. This is about prioritization. You will not be able to build every element of an ESG program at the same time. Resources are always limited. Build a strategy that focuses your efforts on the most important areas. Your strategy should define your goals for the next three years and set specific targets for the next 12 months. Once this is in place, hold firm on your direction. If it’s not in your strategy, it’s off the table.

(4) Employee Handbook

Here is some good news. You probably already have one of these! All you need to do is check to ensure your employee handbook addresses these elements.

• Working hours and conditions

• Compensation and benefits

• Leave (parental, medical, family etc.)

• New employee guidelines and separation

• Discrimination and harassment

• Confidentiality

• Diversity, equity, and inclusion

• Health and Safety

• Collective bargaining/labor unions

• Country-specific requirements

(5)  Ethics Code of Conduct

You need an Ethics Code of Conduct, to be considered a well-governed business. Policies addressing the following issues should be included.

• Child and forced labor

• Corruption and bribery

• Conflicts of interest

• Antitrust / anti-competitive practices

• Whistleblowing

(6) Supplier Code of Conduct

New regulations like the EU’s CSRD and CSDDD are making Supplier Codes of Conduct more important than ever. Companies will be legally required to report on supplier data and conduct due diligence of supplier practices. Review your Supplier Code of Conduct to ensure that it covers everything you need for these new regulations. For example, if you will be collecting data on your Scope 3 GHG footprint (as recommended below), you may want to add a provision requiring suppliers to provide their carbon footprint data.

(7) GHG/carbon footprint

The ESG questionnaires that you receive may ask you for 100+ data points. Right now, the most important piece of information for many investors and clients is your greenhouse gas (GHG/carbon) footprint. Why? Because many of your clients will include your footprint data in their reporting either due to regulatory requirements or their voluntary climate targets. If you don’t have one, I recommend starting on your GHG footprint immediately. It will take you months to engage a vendor, collect the data, and obtain a report. Get this in hand before you start losing business over it.

One more piece of advice: Include Scope 1, Scope 2 and Scope 3. If you are not sure what those are, check out this post on climate terminology.

(8) DEI data and KPIs

Taking a proactive approach to DEI is table-stakes for companies today. You need this to recruit and retain talent and be competitive in bidding processes. Fluffy statements about how you support DEI are not good enough. You need to know where you are today (which requires data) and where you plan to be tomorrow (which requires KPIs).

Have finished all this already? If so, consider adding measurements of your water usage and waste production. These elements are the next-order expectations.

You can build these seven elements step-by-step. Remember that the most important step is the one you take today. If you start now and act consistently, you will be amazed at how much progress you can make over the next 12 months!

Written by: Christine Uri

Link: https://www.christineuri.com/newsletter/the-esg-advisor/key-elements-esg-program?ss_source=sscampaigns&ss_campaign_id=65e362a357489f26e164dce5&ss_email_id=65e3640e45ef4e0e1832ae05&ss_campaign_name=ESG+Ratings%3A+How+to+Crawl%2C+Walk%2C+Run&ss_campaign_sent_date=2024-03-02T17%3A38%3A48Z