Published on: 3 December 2024
Q: What exactly does an Environmental, Social, and Governance (ESG) strategy entail?
A: An ESG strategy, often confused with a 'sustainability strategy', focuses on how businesses navigate investor requirements to comply with ESG norms. It's about understanding and reducing business emissions and their societal impact, aligning with frameworks like the TCFD and the European Sustainability Reporting standards.
Q: How does sustainability differ from ESG?
A: Sustainability typically refers to the environmental, social, and economic impacts of an organisation, including economic factors, whereas ESG focuses more on governance. Governance is crucial as decision-making impacts economic growth and the implementation of eco-friendly and ethical solutions. Governance is also perceived to be difficult to measure. However the indicators of good governance can be found in non-financial reporting behaviours and it is where we place our focus here on the TISCreport platform.
Q: Why is ESG strategy becoming a major focus for businesses?
A: ESG strategy is key for businesses to meet climate and social impact requirements. It involves understanding and leveraging data, which many organisations have in abundance but often in a fragmented and unusable format. Measurability is critical in ESG-specific developments.
Q: Can you give an example of how companies approach ESG?
A: Sure. Here is a manufacturing sector case study we've written about one of our manufacturing company members and their efforts with their supply chains using TISCreport data. They started very simply with an assessment of the compliance behaviours of their suppliers, and quickly used the data to form a strategy that would enable them to increase their ESG impact using their supplier relationships.
Q: What commercial benefits does adopting an ESG strategy offer?
A: Adopting an ESG strategy goes beyond fulfilling sustainability goals. It can lead to strategic sourcing, top-line growth, better relationships with authorities and ethical business practices. In the products sector, it enables companies to charge more for sustainably sourced goods, provided the data supports the sourcing claims.
Q: How does ESG data influence business changes?
A: ESG data can highlight areas for change, like energy consumption, revealing opportunities for cost savings and more efficient resource use. It acts as an incentive for businesses to scrutinize and improve their operational efficiency.
Q: What role do ESG Controllers play?
A: ESG Controllers are crucial for integrating ESG strategies. They coordinate data collection and ensure the information's accuracy, helping businesses provide investment-grade information to stakeholders. This role is becoming increasingly important as financial institutions focus more on environmental and social data. We're seeing more and more of these roles within the TISCreport user base.
Q: How should companies approach ESG implementation?
A: Companies should take a holistic approach, understanding stakeholder interests and identifying strategies for change. This involves adapting reporting, tax planning, operations, and technology. Working with investment firms can provide insights into effective ESG data usage and securing funds. The first place to start is Scope 1 in the context of our customers/clients/buyers. This will then dictate where your work with suppliers will need to focus.
Q: What's the future of ESG data management?
A: The future lies in automating data collection and making the process more efficient, especially for financial reporting. As standards and frameworks evolve, companies new to sustainability can leverage these developments to align with investor requirements and enhance their business practices.
