ESG Programs & 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:
Governance
Planet
People
Prosperity
OF EXECUTIVES AGREE
86% 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
Source: Measuring Stakeholder Capitalism Report — September 2020 — World Economic Forum
Setting purpose
Task force on climate control disclosures implementation
Health and safety
Governance body composition
Land use and ecological sensitivity
Training provided (quantity and price)
Material issues impacting stakeholders
Water consumption and withdrawal in water-stressed areas
Absolute number and rate of employment
Anti-corruption
Diversity and inclusion
Economic contribution
Protected ethics advise and reporting mechanisms
Pay equality
Financial investment contribution
Integrating risk and opportunity into business process
Wage level
Total R&D expenses
Greenhouse gas emissions
Risk for child, forced, or compulsory labor
Total tax paid
ESG Metrics
The following 30 ESG metrics can provide clarity and direction for internal audit departments getting involved with their organization’s ESG reporting.
Source: ESG Reporting Guide 2.0
Environmental (E)
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
Social (S)
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
Corporate Governance (G)
G1. Board Diversity
G2. Board Independence
G3. Incentivized Pay
G4. Collective Bargaining
G5. Supplier Code of Conduct
G6. Ethics and Anti-Corruption
G7. Data Privacy
G8. ESG Reporting
G9. Disclosure Practices
G10. External Assurance
How can Dean Dorton help?
Dean Dorton can help your organization with ESG program and ESG reporting in a variety of ways
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.
