3 Tactics to Incorporate ESG into Your Organization

Over the past few years, environmental, social, and governance (ESG) issues have become much more significant. Though it is not a new concept, organizations are increasingly pushed to achieve various ESG-related goals. The consequences of not investing in ESG—or appearing to not invest—are larger now than ever. In fact, a strong ESG program can be almost as important to potential investors, customers, and your workforce as your financial performance.‍

ESG is increasingly relevant to almost everyone your organization collaborates with. For investors, it could be the reason for deciding against financing. For new hires or current workers, it could be the reason they do not apply to an open role or choose to move to another organization. And for customers, it could be the reason they do not purchase your product or service.

Still, there are multiple reporting frameworks that continue to evolve and guidance is struggling to keep pace with growth. ESG contains many aspects that are difficult for organizations to measure. With constant pressure from every angle, many organizations are unsure how to proceed. They cannot seem to decipher between “what do we have to do?” and “what should we do?”Below are 3 key steps your organization can take to integrate an ESG program.

Establish a Top-Down Tone

Leadership is not only the face of your organization, but should be the face of ESG. They should be preliminary in communicating the importance of ESG and what it means for your organization. This will allow your employees to promote how your organization is managing ESG with its stakeholders. This will also allow everyone in the organization to feel its importance, rather than merely see it as a “check the box” item. Establishing this tone clearly and early will help your organization adapt when it is time for the next two steps.

Implement Ongoing Assessments

You’ve decided to implement an ESG program and have identified the original areas of focus, but as everyday issues continue to evolve, your organization needs to conduct re-occurring, ESG-focused assessments.

For starters, as your organization implements changes to comply and improve in certain areas, there will likely be subsequent changes across day-to-day operations and processes. Additionally, you will need to validate the progress to ensure your organization is on track towards its goals and that the initiative has a measurable impact.

Establish Mirror Reporting

The accuracy of ESG reporting will never be insignificant, which is why your organization needs to use the same rigor as your financial statement reporting.

ESG is not currently a federal requirement so many organizations have implemented a temporary type of program as a “nice to have.” However, that could be more detrimental to your company than not implementing an ESG program at all. If it is found that a company is inaccurately reporting metrics, either intentionally or unintentionally, the impact could be significant. Reporting around ESG needs to have the same scrutiny as federal mandates. Similarly to SOX programs, your reporting should be subject to traditional management assertions including accuracy, rights and obligations, existence, comparability, and completeness. Preparers and reviewers should perform their responsibilities with the same type of rigor and caution. Any questions around the reporting and figures should be thoroughly researched and have the full support of the highest levels of the organization.

‍The push for organizations to address ESG issues is not going anywhere. The time is now for your organization to act, in order to stay up to date with the everchanging ESG landscape. If your organization needs help tackling ESG, get started here.