The business world is always evolving and keeping up with the changing times the focus has now shifted to a more ethical and environment-friendly approach for businesses. Environmental, Social, and Governance (ESG) is not of umpteen relevance in the present context. It is important to consider how a business impacts the environment. ESG-compliant businesses draw more investors in the modern world and in this Journey of being environmentally and socially responsible ESG advisors play a crucial role.
ESG Criteria: The Pillars of ESG
ESG provides thrust on three key pillars of environmental, social, and corporate governance. These pillars of ESG play a vital role in adding a new paradigm that focuses on a better tomorrow. Under environment, the look-out factors are:
· Using energy and efficiency
· Having a proper strategy for climate control
· Strategizing waste reduction and focusing on waste management
· Loss of Biodiversity
· Emission of greenhouse gas
· Reducing carbon footprint
The social aspect of ESG deals with concepts of equality, opportunity, safety, etc. Below mentioned are the social indicators of an ESG-compliant business.
· Standing by the labour Laws
· Creating a safe workplace environment for workers
· Adhering to employee benefit terms and conditions
· Engaging in community-building activities
· Partnering with responsible supply chains
· Giving equal and rightful opportunity to employees
Under governance, the ESG body always expects ethical transactions and transparency.
· Adhering to corporate governance rules
· Mitigation of business risks
· Promoting ethical business practices
· Dissolving conflict of interest
· Accounting Transparency
Implementation of these three pillars increases the ESG performance score of a company and hence draws in more ethical investors of the big league. ESG is now a differentiating factor in all big-ticket investments. Therefore, it is very important to have an ESG report or take the help of ESG advisors to do a company’s ESG reporting.
ESG Reporting: Measuring business opportunities and reducing risk
It is now becoming mainstream for companies to report their ESG performance, just like their financials. ESG reports are declared on an annual basis and cover both the company’s goals and its performance in the current year towards achieving those goals. To objectively report on ESG performance, some various KPIs or metrics have been adopted. This is particularly important to get an understanding of the risk that is envisaged so that pre-emptive mitigation is possible. The chosen metrics will vary across industries and depend on the nature of operations. For instance, companies that have plants and factories need to be aware of and report on their gas emission and carbon footprints. For a company that sells consulting services, reporting needs to be done on the energy and paper consumption across its offices or even the plastic waste that is being generated because of housekeeping activities.
ESG reporting is increasingly being considered a direct measure of the strength of a company’s governance structures. They provide valuable insights into the sustainability posture of the company, clearly outlining the progress being made for society’s wellbeing. Companies with strong ESG reports create more value for society as a whole and this is not only reflected in their public perception but also the Governments’ views towards it.
It is in the best interest of companies to measure and then manage their ESG performance to achieve their long-term goals. Broadly speaking, a strategy involving the following can be adopted.
· Current state analysis: ESG advisors can be consulted for an outside-in assessment of the operations to understand where the company is in terms of each of the three ESG pillars.
· Target state definition: Depending on the current assessment, it is important to define the midterm and long-term target states of the business. This would involve factoring in both planned growths as also market-led behaviors that the business is likely to be impacted by.
· Develop plans and ESG reporting framework: Once the target state has been established, the ESG advisors can help draw up a blueprint covering areas of investment, process changes, product modifications, engineering best practices, etc. to achieve the desired state. They will also help put together a reporting framework that would be most suitable depending on the regulatory and governance requirements.
· Monitor ESG reports and integrate them into decision-making: The reports that are generated are likely to be read by a vast cross-section of stakeholders. As such they need to be constantly monitored and insights published in these ESG reports need to be factored into regular business decision-making.
The Value of ESG Advisors
During its regular business, it is not always feasible for organizations to be aware of the nuances of ESG. Nor is it possible to be aware of all the compliance parameters and best practices that are constantly evolving. It is here that the role of ESG advisors is critical. ESG advisors cover a broad ambit of services, some of which are listed below.
· Knowledge and capability building: ESG advisors are well-versed in all aspects of ESG policies, research, trends, and guidelines. By partnering with a business, they bring invaluable expertise to equip the leadership and build internal capabilities to navigate the evolving ESG landscape.
· Assessments and strategy planning: Using comprehensive assessment frameworks and workshops, ESG advisors work closely to understand the current state of the business and develop ESG strategies that are aligned with the leadership’s objectives and goals. They can also help put together action areas and projects that need to be taken up to shape the company’s actual performance on the ESG front.
· Benchmark analysis and target setting: ESG advisors bring in a unique view of actual industry performance. Not just limited to research and academia, but actual competitive landscape and industry comparators for ESG which help simulate various scenarios and understand the future projections more objectively.
· Disclosure and ratings: By helping companies file their ESG disclosures and reports, ESG advisors improve the investment worthiness of companies. Ratings help drive the investment process not just during capital market participation but also during private equity deals. Compliance with ESG standards is more than just a highlight on the annual report. ESG advisors help companies objectively showcase their commitment to the future and that says a lot about the management and their long-term vision for the company.
· Cost advantage: Last but not the least, ESG advisors also help companies lower their operational cost base. By identifying areas of expense leakage, better ESG positioning often tightens a company’s spending profile. It also mitigates the risk of penalties and other regulatory levies. As a result, the business has better financials and a more robust projection for the future.
In the days to come, as we become more focused on sustainability, ESG is going to assume even more importance. Some estimates suggest that ESG-related assets will exceed a combined valuation of USD 50 Trillion by 2025. The correct ESG advisors will be able to help companies align their operations and portfolios in accordance so that they can achieve better valuations. For wealth managers and investors, these ESG advisors help to provide tailor-made ESG advice on portfolio companies that are worth evaluating for investment. This not only helps with sound investment decisions but also brings focus to companies that are contributing towards a better future.
Choosing Corpstage: Promoting a Sustainable Future
Corpstage is one such company that will help you in this journey of sustainability. Being one of the promising ESG advisors, we at Corpstage aspire to bring you tailored solutions that are going to make your business ready for a greener future. From providing accessible sustainability solutions to organising ESG awareness programmes, and courses, calculating the carbon footprint of your company to providing easy and effective solutions to reduce it and making it a net zero, we do it all.
Corpstage not only advises or limits its scope to consulting but also goes far beyond that. Our services are built on a cutting-edge technology platform which is available in SaaS mode for diverse businesses. This SaaS-modeled platform Corpstage provides is innovative and is designed in a manner to create an ecosystem that is favorable and supportive of sustainability. With the experience, knowledge, and expertise we provide the perfect consulting solutions to companies and help them achieve their future goals.
We provide ESG solutions on a global level while aligning with the relevant sustainability frameworks as we have a worldwide network. Being technology oriented we do not require physical visits and large paper volumes to advise on your business. Instead, it is easy to get onboarded to our SaaS platform and join the community of ESG professionals. Whether you are an individual an SME or even a corporate – Corpstage has something to offer to each of one of you. The platform is also automated through a Blockchain that makes all your transactions even more secure. It only takes a few steps to join our ESG platform and to start using it. Join Corpstage and be part of the thriving ESG ecosystem today!