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The Essentials: Environmental, Social and Governance

There’s no better time than now to revisit your ESG program.


The more that regulators, investors, consumers and employees scrutinise your ESG activities and reporting, the more they will find if it isn’t up to scratch. And the impact on your business performance should not be underestimated.


Having a complete and transparent ESG program is no longer optional. It’s essential for organisations to consider ESG implications at every level, across all business units.


How do you ensure your program is as robust as it needs to be?


Keep reading this blog for a summary of ESG and its impacts, implementing a successful ESG program, reporting on risks and activities, and assessing its effectiveness.




What is ESG?

We see the term ‘ESG’ thrown around a lot in financial services, especially in relation to investing. So, what is ESG? It stands for Environmental, Social and Governance. With respect to investing, the term is often used interchangeably with sustainable investing or socially responsible investing. Engaging in ESG activities or investing means considering environmental, social and governance factors when making business or investment decisions. Looking closer at each factor that makes up ‘ESG’[i]:

  • Environmental – emissions that affect the climate, sustainable use of resources, and the size of the company’s collective environmental footprint, including its supply-chain impacts.

  • Social – diversity, social equity and fair labour issues, including those related to conflict minerals, child labour, and slavery throughout the extended enterprise.

  • Governance – diversity in board composition, transparency, and attention to controls designed to drive ethical conduct at all levels of the company.

The extent to which each of these factors are relevant to the operations of an organisation will depend on the nature of the business. However, no organisation is completely immune to external critical assessment in relation to ESG issues.


ESG issues have been on the rise in recent years as organisations, consumers, investors, regulators and other stakeholders are becoming increasingly environmentally and socially conscious. These stakeholders tend to have varying levels of demand when it comes to ESG, which makes it challenging for organisations when reporting on ESG. To be adequately prepared to withstand the critical eyes, and to simply play a role in doing good in this world, organisations need to implement a successful ESG program.


Implementing a successful ESG program

Implementing and running an effective ESG program was once a “nice to have” for organisations; a way to differentiate from the competition. That is no longer the case. Having an effective ESG program in place is now an expectation for organisations. You’ve probably even noticed the increasing number of questions dedicated to ESG issues in recent tenders that your organisation has participated in. Organisations can no longer sit back in relation to these issues, rather, proactiveness is non-negotiable.


So, how do you implement a successful ESG program? In their recently published e-book ‘Essential Connections for ESG Success’, OCEG defines the key steps as follows:

  1. Establish ESG objectives that align to overall business objectives.

  2. Define and manage ongoing ESG leadership and team.