How should we go about developing an ESG Policy? As ESG becomes increasingly more
important, this is a question that smart leaders are asking. In this article I outlined the general approach we take when we accept assignments to work with firms on the development of an ESG Policy.
The contents are listed below so you can see the steps involved in the process.
Contents
1 Introduction
2 Background
3 Workplan and Approach
a) Inception & Planning
b) Business Case Development
c) Current Status of ESG Efforts
d) Review of World-Class ESG Policy Frameworks for your sector
e) Group review of above – possibly involving board
f) Development of draft ESG Policy and Implementation Framework
g) Review of Draft Policy and Implementation Framework with key stakeholders
h) Refinement and finalization of ESG Policy and Implementation Framework
i) Development of an adoption and roll-out strategy and workplan
4 Timeline
1 Introduction
The CSR | ESG Institute has a standard approach to assisting companies with the development of an ESG Policy.
Our approach is based on the fact that effective, value-creating corporate approaches to ESG must integrate and align Policy, Projects and Performance as well as reporting.
And that the ownership and understanding of the ESG Value creation paradigm must permeate the organization from the Board Level to field workers and must cut across functional and operational areas. Isolated, ghettoized approaches to ESG are not only doomed to fail, they are doomed to be costly, debilitating failures
𝟮. Background
ESG Policy, ESG Performance and ESG Reporting have emerged as de-facto, mission critical requirements for companies in today’s business and sustainability driven operational paradigms.
Whether regulatorily mandated or not, failure to strategically address all aspects of ESG can undermine current and future growth and even call into question current survivability. The effects of ESG performance permeate all aspects of the business, from finance to H.R. to engineering to operations, regulatory compliance and stakeholder engagement.
ESG engagement and performance alone are not sufficient. Investors today expect businesses to be extremely efficient at converting investments and spending into value. This applies to ESG investments the same as it applies to other capital and operating investments.
To be effective and efficient a company’s approach to ESG must be strategic and integrated; aligning ESG Policy, Project Performance and Reporting.
And, it must permeate corporate functions and operations, ensuring that ESG investments and activities not only create demonstrable environmental and social value, but that they create and contribute to corporate value at the same time. Effective ESG, the type that drives competitive advantage, systematically integrates all these value dimensions and spreads ownership and buy-in throughout the organization.
The steps, which are continuously evaluated and adjusted based on in-process learnings, are outlined below.
3. Workplan and Approach
The CSR| ESG Institute has learnt from years of experience that successful approaches to integrating ESG into businesses, especially businesses in the energy and power product sectors, utilize a wholistic, synergistic and value-centric approach.
This approach integrates all aspects (Policy, Program, Evaluation and Monitoring as well as Reporting) in a way that supports and feeds off each other. It concurrently identifies key internal and external stakeholders and develops and communicates sustainable value propositions, ensuring there is broad internal and external buy-in.
The CSR | ESG Institute approach involves a number of integrated steps that build on the expertise and experience already present in the company, building from what you have and know, rather than creating expensive and unnecessary new processes and procedures.
The steps, which are continuously evaluated and adjusted based on in-process learnings, are outlined below.
a) Inception & Planning
• Initial project planning meeting with client
• Determine core internal project management team and structure
• Finalize project terms of reference
• Determine project timeline, reporting, etc.
b) Business Case Development
• Determine the key elements of the ESG Business Case and how should they be addressed in ESG Policy
• Internal Value Propositions
• External Stakeholders & Value Propositions
• Review/revise with project management team and others as necessary
c) Current Status of ESG Efforts
Most firms have many elements of a comprehensive approach to ESG in place. This include existing programs, sustainability reporting and other areas.
• Review and catalogue these elements, identifying gaps and/or required enhancements
d) Review of World-Class ESG Policy Frameworks for your sector
• Undertake research to identify world class ESG Policy Frameworks in the relevant Sector
• Evaluate with a focus on which elements are particularly relevant to the firm’s situation and priorities
e) Group review of above – possibly involving board
• Review policy examples from above with project management committee and, if desired, with the Board (or key members)
f) Development of draft ESG Policy and Implementation Framework
• Based on above findings and work, develop a draft ESG Policy and Implementation Framework for the company
g) Review of Draft Policy and Implementation Framework with key stakeholders
• Review draft policy with key stakeholders, identifying gaps, challenges and opportunities
h) Refinement and finalization of ESG Policy and Implementation Framework
• Revise draft policy and implementation framework and finalize same in collaboration with key stakeholders
i) Development of an adoption and roll-out strategy and workplan
• Working with key stakeholders develop an adoption plan, roll-out strategy, workplan and monitoring framework for the new policy.
4. Timeline
The final timeline will be determined during the Inception Phase to match the business’ needs and management availability. It is expected that the final timeline will be between 6 – 12 weeks from Inception to Completion.
Of course, this general process should be adapted to meet the specific needs of your business and organization.
But, whether you undertake the work yourself, contract with our Institute, or use another consultant, the critical issue is that you take an integrated approach. An approach that aligns and optimizes value across social, environmental and business dimensions. This will help ensure the effectiveness and resilience of your Policy and equip you for the demanding years ahead.
ESG, Sustainability & CSR should be as much a business value driver as it is a social and environmental value driver. If it gets out of balance it creates risk and makes the CSR and indeed, even the business itself, potentially less sustainable.
Business is about creating value. CSR is also about creating value; value for society, for
environment and for shareholders.
Thanks for reading
Wayne Dunn
Founder and President
