By: Ilan Lavan, Business Development Director, ESG & Cybersecurity at Findings
Your ESG rating reflects your company’s exposure to environmental, social, and governance risks that have financial implications.
While only a few companies had committed to net-zero emissions two years back, sustainability pledges have come a long way since then. One-fifth of the largest companies in the world have made a net-zero emission pledge.
Here are three quick adjustments you can make to your ESG plan to boost your rating and achieve ESG efficiency.
Set a sustainability goal
One of the quick adjustments you can make is to set a net-zero carbon emission target. This will align your business with the world’s ESG targets while positioning you alongside big companies such as Nike, J&J, and Apple, among others.
Everyone in the organization must be clear about the scope of the target and the action plans for achieving them.
Here are three steps you can take to accelerate your ESG journey and boost your rating:
- Measure current emissions – Assess your emission levels and identify areas to cut emissions. These can include investing in electric vehicles, switching from fossil fuels to renewable sources, adopting sustainable travel policies.
- Set short-term goals – The short-term targets help you understand how quickly you need to reduce your greenhouse gas emissions.
- Focus on reducing scope 1, 2, and 3 emissions -Net-zero, per SBTi, involves reducing scope 1 (direct emissions from owned sources) and scope two emissions (indirect emissions from energy purchased) to zero. While scope three assets are those that are not controlled or owned by the reporting organization, they indirectly contribute to the business value chain. To achieve your sustainability targets, you have to look at the entire supply chain.
In June of 2021, the House of Representatives passed legislation requiring public companies in the US to disclose their annual and quarterly ESG metrics. With ongoing efforts from governments, regulators, and forums worldwide, globally uniform ESG disclosure standards may soon become a reality.
Apart from regulators, businesses face increasing demand from investors, rating agencies, and the general public to provide more information on their sustainability measures.
Investors, asset managers, and stakeholders rely on “decision-useful disclosures” to better understand the climate risks and make intelligent investing decisions.
Generate to calculate quantitative disclosures involving metrics on carbon emissions, climate change impact on business finances, and status of progress on climate-linked goals. Qualitative disclosures can include how the leadership handles climate-related opportunities and risks and how they shape its strategy. According to Chairman of SEC, Gary Gensler, standardized mandatory disclosures may pave the way for consistency, clarity, and comparability of ESG reports.
Agile companies that hold themselves accountable to investors and customers by stepping up their transparency on ESG will not only boost their rating but be more valuable.
Here are the best practices for ESG reporting:
- Determine the target recipient of your ESG reports – investors, regulators, or other stakeholders
- Liaise with concerned departments within the company to gather relevant information, inputs, and diverse perspectives
- Determine which ESG metrics and factors are relevant to your business and are meaningful to your stakeholders
- Clearly define technical terms and metrics used
- Focus on risks and opportunities that impact your business’s long-term financial and operational performance
- Ensure ESG information is easy to find through dedicated disclosure pages and links
Automate ESG assessment
An automated assessment platformhelps your business turn your ESG intentions into a reality. Apart from handling a significant part of your ESG workload, automation tools offer tools for calculating greenhouse gas emissions, generating disclosures, risk reports, and climate risk analytics.
A comprehensive automated assessment platform gathers ESG data from across the assets and portfolios of your company. You can then use the tool to characterize the data, select standards, develop custom KPIs and metrics.
When you automate ESG assessment, you can better:
- Identify ESG opportunities and risks that impact your business model, fixed assets, and supply chain
- Reduce transaction time and costs by quickly identifying potential ESG issues.
- Track progress of your ESG Program.
- Identify opportunities to make ESG improvements and achieve potential cost savings early on.
- Streamline ESG reporting to attract investors
Sustainability plays a central role in an organization’s revenue, reputation, and competitive edge; quick adjustments such as committing to net zero, improving reporting, and investing in automation help your business boost your ratings.
One of the most effortless adjustments you can make is implementing automation to catch problems early on and make smarter and faster decisions while ensuring ESG compliance.