Environmental, Social, and Governance Programs and ReportingDean Dorton2021-06-02T10:31:08-04:00
Environmental, Social, and Governance Programs and Reporting
Does my company need an ESG program?
Public companies have seen the need to implement Environmental, Social and Governance (ESG) programs to enhance stakeholder value through the company’s commitment to the future. Investors have been factoring into investment decisions the presence of an ESG program that focuses on sustainability. To help companies attract investors, Nasdaq launched an ESG Advisory Program in 2019. The program lays out ESG metrics that provide investors a clear understanding of the company’s sustainability objectives.
In 2020 Nasdaq rolled out an ESG platform for public companies that allows a portal to input ESG factors and the service generates meaningful ESG metrics and accommodate the different sustainability frameworks that rating agencies and stakeholders expect.
Why should I care about ESG programs and ESG reporting now?
It is important to act now as within the next 10 years it is highly likely that all companies will be required to have a form of an ESG program. ESG programs may be scaled to the size of the organization. The pressure to implement an ESG program is coming from regulators, investors, rating agencies and general public. Even without strict requirements, the benefits of going through an ESG assessment is worth the effort. Implementing aspects of an ESG program will help improve the viability of any organization.
Four Pillars of Metrics
Companies worldwide are all using a standard list of 21 metrics for ESG reporting. The ESG metrics are built around four pillars:
of executives agree that reporting on a set of universal ESG disclosures is important and would be useful for financial markets and the economy, according to a survey by the World Economic Forum. Companies view the importance of social, climate, and other non-financial factors as crucial for long-term viability and success.
21 Core Metrics
Governance body composition
Material issues impacting stakeholders
Protected ethics advise and reporting mechanisms
Integrating risk and opportunity into business process
Greenhouse gas emissions
Task force on climate control disclosures implementation
Land use and ecological sensitivity
Water consumption and withdrawal in water-stressed areas
Diversity and inclusion
Risk for child, forced, or compulsory labor
Health and safety
Training provided (quantity and price)
Absolute number and rate of employment
Financial investment contribution
Total R&D expenses
Total tax paid
Source: Measuring Stakeholder Capitalism Report — September 2020 — World Economic Forum
The following 30 ESG metrics can provide clarity and direction for internal audit departments getting involved with their organization’s ESG reporting.
E1. GHG Emissions E2. Emissions Intensity E3. Energy Usage E4. Energy Intensity E5. Energy Mix E6. Water Usage E7. Environmental Operations E8. Climate Oversight/Board E9. Climate Oversight/Management E10. Climate Risk Mitigation
S1. CEO Pay Ratio S2. Gender Pay Ratio S3. Employee Turnover S4. Gender Diversity S5. Temporary Worker Ratio S6. Nondiscrimination S7. Injury Rate S8. Global Health and Safety S9. Child and Forced Labor S10. Human Rights
Dean Dorton can help your organization with ESG program and ESG reporting in a variety of ways:
Define and establish a company ESG program
Create ESG goals and expectations with input from stakeholders
Assist with determining which criteria are most relevant for your company
Identify initiatives already in place that provide a foundation to your ESG program
Create and provide a system to maintain key metrics and reporting timeline
Audit the effectiveness and any risks of your ESG program
Whether you are in the very beginning stages of assessing the need for an ESG program or already have an ESG program established and want to make sure your ESG reporting and metrics are aligned, Dean Dorton’s assurance team has the expertise and experience to make it easy for you to create a successful ESG program.
Send us your name, email, and phone, and a Dean Dorton representative will contact you.
The matters discussed on this website provide general information only. The information is neither tax nor legal advice. You should consult with a qualified professional advisor about your specific situation before undertaking any action.