What is ESG Criteria and How Can You Implement an Effective Strategy? - Computer Disposal Limited
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What is ESG Criteria and How Can You Implement an Effective Strategy?

With the investors, stakeholders and the public at large becoming more aware of how companies conduct themselves ethically, the need for businesses to have clear environmental, social and governance (ESG) policies is more crucial than ever.

But what exactly are the criteria that make up ESG and why does it matter so much right now? Here, we’ll look at what goes into ESG in more detail, investigate why an ESG strategy is so important, and list some methods you can use to help implement a more effective strategy for ESG across your business.

What is ESG?

ESG stands for environmental, social and governance. Although the acronym encompasses a broad range of elements, each letter can largely be summed up as follows:

As investors increasingly value these elements, companies can no longer be passive about such criteria. Put simply, the letters that make up ESG hold significant financial relevance; they could easily be the difference between an investor opting to invest in one business over another.

Now that we’ve been acquired by Restore, CDL will follow the same ESG strategy in order to minimise its impact on the environment, improve its contributions to surrounding communities, and optimise its obligations to those who work with us. More specifically, it looks something like this:

Delivery vans

What is the difference between ESG and CSR?

If you’ve come across Corporate Social Responsibility (CSR) before, then ESG might sound familiar. While the two are largely concerned with how a company can impact society and the environment, there is still an important distinction.

CSR is a business model used by individual companies, but as we’ve mentioned, ESG is a criteria that investors use to assess a company, so they can determine whether or not they’re worth investing in.

Why is an ESG strategy important?

By now, you should be forming more of an idea as to why ESG and an according strategy is so important in the world of modern business. A passive approach to ESG is no longer something businesses can afford to do. Put simply, it’s essential.

Without any sort of position on ESG, you could well be left in the competition’s dust. An ESG strategy is one way of keeping – and potentially even setting – the pace with others in your sector.

ESG also provides businesses with an extra layer of risk management. With ESG strategy at the forefront of your operations, you’ll be able to mitigate operational and reputational risks. Without a proper strategy in place, however, you’ll leave yourself open to ESG risks, while ESG opportunities themselves could also go begging.

As for the individual benefits each letter of ESG affords, the plus points provided by a strategy is most definitely a good look to investors. For example:

woman smiling with her colleague

How to implement an effective ESG strategy

Carry out a materiality assessment

Rather than taking an ad-hoc approach to ESG, you need to identify your needs. Carrying out a materiality assessment allows you to gain a better understanding of which steps you should be taking and where. Using a Materiality Matrix will help you decide what to pursue on the way to forming an ESG strategy.

Identify your baseline

Taking a closer look at your current state of play creates a clearer picture of where your business is right now before it moves towards where it wants to be. Gather together any relevant data, policies, and programmes so you can assess existing policies, metrics and engagements within your company. By doing so, a business can identify any positives across the organisation, as well as the areas it needs to work on.

Set future goals and objectives

With your baseline established, you can now begin to look at what you need to focus on going forward. In creating objectives, ask yourself what needs to be maintained, improved, and optimised.

Perhaps there’s evidence that you’re doing a good job in certain areas which therefore need only be maintained for the time being? Or maybe there are areas with room for improvement that you need to step up? You may also have identified areas where you’re excelling but you can take even further through re-focused efforts.

By identifying strategic objectives in this way, your strategy will begin to take shape.

Develop a strategic ESG roadmap and framework

With a roadmap, you’ll have a more transparent view of accountability, as well as milestones, for any key actions you propose. Your roadmap should be achievable, containing both phases and steps which you can measure along the way.

Meanwhile, an ESG framework provides stakeholders with a clearer picture of where your strengths are and what goals you’re driving towards. In building one, you should look at how it applies to your organisation (i.e., by operation type, function, or region) and how you’ll monitor progress to achieve goals.

colleagues looking at plans on laptop

Create action plans and measure KPIs

By fusing ESG into business practices and processes, you stand a greater chance of your strategy succeeding. Sure, ESG matters at a corporate level, but your teams have a role to play in its progress too.

Be sure to provide them with the relevant guidance and best practices to achieve results, such as:

Report progress

Knowing how your ESG strategy is progressing towards meeting its goals is key. The content and format of your reports are both hugely important too, so it’s vital you know what you want to highlight in them and how this information should be spread throughout the company.

For instance, you may want to include evidence of how well the strategy is progressing by detailing successes and any future plans. Comprehensive data is also a great way of showing investors and stakeholders how you’re getting on quantitatively.

The way you present this information also matters a great deal. Your audience will want to be able to access this information easily, so it might be worth creating a PDF report that’s readily available to visitors of your website, for instance.

Likewise, keeping internal staff abreast of your progress is essential. You may want to send out regular emails or brochures that acknowledge how their contributions have helped the business move closer to achieving its goals.

 

CDL is one of the UK’s leading IT disposal companies, working to help private and public businesses safely retire and recycle their outdated IT assets. To find out how we could help your business, or for more of the latest tech news and advice, visit our homepage or call our team today on 0333 060 2846.

 

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