Insights > A Practical Guide to Building Your ESG Strategy

A Practical Guide to Building Your ESG Strategy

ESG just hit your desk? Here are seven practical steps to get your ESG program started.

With new regulations and increased customer, supplier, and employee requests surrounding ESG, many companies that are still relatively new to the ESG space now have ESG reporting and communications expectations thrust upon them. Requests for ESG disclosures can be the hurdle between new business and missed opportunities.  Internally, many organizations do not have the teams with the capacity or expertise to manage data collection and oversight of these new projects. It is becoming increasingly difficult to decipher recommendations from regulations, and how and where to appropriately publish your ESG disclosures, and it may seem easier to simply opt-out.

So, how do you decide what to disclose? Where do you begin?

Here are seven ways to get started.

  1. What matters to my company? It would be impossible to address everything ESG all at once, even though it may seem like the ratings agencies and frameworks expect you to have it all. Instead, determine what ESG topics are important to your organization – this should remain any company’s guiding principle when getting started in ESG: Which topics will add value and align with the company’s purpose? What is the overarching business strategy and how does ESG support these organizational goals?
  2. Consider surveying key stakeholders to find out what matters to them. ESG can cover a broad range of topics. We recommend conducting a materiality assessment to provide insight into the highest priority items from your stakeholders. These results can offer important context to your internal teams and strategic prioritization for ESG project managers, which is helpful to teams and budgets.
  3. What is required for my company to report and who is evaluating the disclosures? It is important to understand which ESG regulations your company is required to comply with, including the SEC’s climate, human capital management, cybersecurity rules, and the European Union’s Corporate Sustainability Reporting Directive (CSRD). Additionally, consider your customers, clients, or business partners’ ESG reporting requirements, as these stakeholders are increasingly raising expectations for various ESG disclosures. There are long-standing ESG rating agencies, like ISS, Refinitiv, MSCI, or EcoVadis which stakeholders may use to evaluate your organization’s view of sustainability on top of required disclosures.
  4. What are peers doing? Peer benchmarking ESG disclosures is a crucial step when developing a multi-year ESG roadmap. It is also helpful in understanding customer expectations in reporting. A peer review can highlight where you can improve to rise to the top or get on par with your peers.
  5. What are you already doing? It is very likely that you already have an ESG story to tell. Most companies already have programs in place or are collecting the specific data that ESG-focused stakeholders look for when assessing a company’s ESG performance and assigning ESG ratings. Your company may not have previously classified these programs and initiatives under the title of ESG. For example, initiatives such as employee training programs, benefits your company offers, or demographic reporting all would fall under the ‘social’ pillar of ESG. These types of programs and associated data are the low-hanging fruit—information that your company already possesses and that requires little to no heavy lifting to collect and publicly disclose to help improve overall ESG scores.
  6. Start with a website. ESG reporting can be as simple as an update to your website. Most public disclosures do not need to start with a formal sustainability report or adherence to one of the many frameworks available. Instead, dedicate content on your website’s designated ESG or Investors page as a space to publicly share key disclosures. As your ESG disclosures mature, your reporting can become more formal, such as a sustainability report or framework disclosure.
  7. Build a long-term roadmap. Once the initial disclosures are complete, make a plan for what’s next. Incorporate a roadmap that is made public for improving your scores in both the short and long term. Transparency throughout the process can win favor when the company is evaluated for progress. With time and commitment, your ESG program will mature and will increase both the quantity and quality of your disclosures.

Building support from members of the management team will help jumpstart the process of ESG disclosures. They may drive the process, or they may need to be led along the ESG path with a peer benchmarking analysis which shows what it will take to achieve at least “middle of the path” ESG disclosures.

It’s a mistake to hold back on ESG reporting because you don’t think you are doing ESG well enough yet. Instead, be transparent with the data you have – your baseline – and report on your strategy to move ahead.

Need help navigating the ESG landscape? If you need some insights as you develop your ESG program, Riveron consultants are available to perform peer research, conduct materiality assessments, or help you shape your ESG communications, via company website or through formal reporting processes. We are here to be invaluable resources to help kick off your ESG reporting journey, structuring your program, and identifying the most impactful ways to boost your scores immediately and over the longer term. Give us a call to start the conversation, and we’ll help you remove all the hurdles in your path to ESG.

Want to get additional insights direct to your inbox?

Subscribe to Riveron insights and get relevant news and trends shaping the world of finance, accounting, and operations.