In today's business world, paying attention to ESG (Environmental, Social, and Governance) is a big deal. In case you are new to ESG, ESG factors are all about how a company does things that are good for the planet, treats people right, and has solid leadership. It's not just about making money anymore—it's about being sustainable and ethical.
Furthermore, according to UKG research, intentional ESG is one of the twelve employee expectations categories. The employee expectations imply that employees desire companies to actively implement and expand ESG programs, touching on another expectation category – Shared Value Alignment.
Similarly to DBI&E, ESG is complex, as it covers three large areas (Environmental, Social, and Governance). Before we are going to share some short-term actions and steps that you can apply to start moving in the right direction with establishing an effective ESG program, let’s take a closer look at the five core reasons why ESG matters in today's business landscape:
Managing Risks: ESG helps companies stay ahead of potential risks. Climate change, labour issues, and shady corporate behaviour can harm a company's reputation and bottom line. By considering ESG from the start, companies can be proactive and deal with these risks before they become major headaches.
Investor Buzz: Investors are into ESG these days. They know companies with good ESG practices tend to make more money and have fewer problems. If a company focuses on ESG, it can attract investors, save money, and get access to more opportunities.
Meeting Expectations: People expect companies to be responsible and do good things for society. ESG factors match these expectations by tackling climate change, fairness, diversity, and ethical business practices. When companies meet these expectations, they build trust, keep customers happy, and have better relationships with everyone involved.
Getting Ahead: Paying attention to ESG can give a company an edge. It stands out when a company cares about sustainability, fairness, and good leadership. It attracts top talent, gets more customers who care about making a difference and has stronger partnerships. ESG-focused companies are seen as intelligent and forward-thinking, which helps them stay on top.
Creating Long-Term Value: ESG is about improving things for the long haul. By considering the impact on the environment and society, companies can develop new ideas, use resources wisely, and create products that people need. Long-term planning makes financial sense and helps build a better world.
If you are at the early stages of your ESG journey, we recommend you focus on laying a solid foundation first. In the case of ESG, that means having policies that ground the business in all three areas of ESG. Following is a list of 13 policy titles that every company should consider as a starting point.
- Equal opportunity/Non-Discrimination policy
- Supplier Code of Conduct policy
- Workplace Safety policy
- Code of Ethics for Senior Executives
- Anti-Competitive/Anti-Trust Policies
- Anti-Corruption Policy
- Political Contributions Policy
- Comprehensive Environment Policy
- Human Rights Policy
- Child Labor Policy
- Policy Against Forced Labor
Insider Tip: You may be familiar with renowned organizations like MSCI or Sustainalytics. These entities diligently scour the vast expanse of the internet, meticulously evaluating ESG-related information to gauge the extent and efficacy of companies' ESG endeavours. The outcome of their assessment is encapsulated in an ESG score, a valuable metric that showcases a company's commitment to environmental, social, and governance aspects.
While ensuring optimal visibility and accurate categorization of your company's ESG initiatives, it is crucial to feature your ESG-related policies prominently on your website. Consider employing the exact policy names listed above, allowing the diligent little web crawlers to identify and catalogue your ESG efforts effortlessly. By adopting this approach, you can effectively communicate your dedication to sustainability and responsible business practices to these meticulous evaluators and, ultimately, to stakeholders and investors seeking comprehensive ESG information.
Okay, with that vital tip under your belt, are any templates and resources available to help organizations develop ESG policies? Yes, these templates can serve as a starting point and be customized to meet specific business needs.
Here are a few resources you might want to check out:
- Global Reporting Initiative (GRI): GRI provides a comprehensive sustainability reporting framework that includes guidance on developing policies. Their website offers templates and examples of ESG policies and disclosures.
- United Nations Global Compact (UNGC): UNGC offers resources and guidance on integrating the Ten Principles of the Global Compact into corporate strategies and operations. They provide sample policies on various topics, including human rights, anti-corruption, and environmental sustainability.
- Industry Associations and Networks: Industry-specific associations or networks often develop sector-specific ESG guidelines and templates. These resources can provide insights into relevant ESG factors and help craft policies that address specific industry challenges.
When utilizing templates, it's essential to customize them to reflect the organization's unique circumstances, values, and operations. Consider seeking legal counsel or consulting with ESG experts to ensure the policies align with applicable laws and regulations and effectively address the organization's ESG goals.
So, bottom line: ESG is a big deal in today's business environment because it helps manage risks, positively impact investors' perspectives, meet employee and consumer expectations, get ahead of the competition, and create long-term value. It's not just about making money—it's about making a difference. And that's something everyone can get behind.
Here's why each of the 13 policies is essential:
- Equal opportunity/Non-Discrimination policy: This policy promotes fairness and inclusivity by ensuring that all individuals are treated equally and free from discrimination based on race, gender, religion, or disability.
- Supplier Code of Conduct policy: A supplier code of conduct establishes expectations for suppliers to uphold ethical and responsible practices, including labour standards, environmental sustainability, and human rights, throughout the supply chain.
- Workplace Safety policy: This policy prioritizes the health and safety of employees, creating a safe work environment that minimizes the risk of accidents, injuries, or occupational health hazards.
- Code of Ethics for Senior Executives: A code of ethics outlines the expected ethical standards for senior executives, guiding their decision-making and behaviour to maintain integrity, transparency, and accountability.
- Anti-Competitive/Anti-Trust Policies: These policies prevent anti-competitive practices and ensure compliance with laws and regulations, fostering fair competition in the marketplace.
- Anti-Corruption Policy: An anti-corruption policy establishes a zero-tolerance approach to bribery, corruption, and unethical business practices, promoting transparency and integrity in business dealings.
- Political Contributions Policy: This policy provides guidelines for political donations and contributions, ensuring transparency, compliance with laws, and avoiding conflicts of interest.
- Comprehensive Environment Policy: An environment policy outlines the company's commitment to environmental stewardship, including efforts to reduce carbon emissions, conserve resources, and mitigate environmental impact.
- Human Rights Policy: This policy demonstrates the company's commitment to respect and uphold human rights within its operations and across its value chain.
- Child Labor Policy: A child labour policy prohibits the use of child labour, ensuring compliance with international labour standards and safeguarding the rights and well-being of children.
- Policy Against Forced Labor: This policy prohibits forced labour practices and human trafficking, ensuring all employment is voluntary and free from coercion.