BREAKING NEWS!!

ICAG Partners has been honored with the prestigious “JUMP SOLUTION” award in the Greenwashing TechSprint organized by the Global Financial Innovation Network (GFIN). This recognition is a testament to the innovative efforts and commitment of ICAG Partners towards environmental sustainability. We congratulate ICAG Partners on this remarkable achievement and their dedication to making the world a greener place.

ICAG is a leading provider of strategic ESG Consulting including ESG Risk Mapping and Framework, ESG Policy and Governance, Carbon Accounting and Carbon Credit assessment and reporting, Regulatory Compliance including EU ESG Regulatory Framework.

What is ESG?

ESG stands for Environmental, Social and Governance (ESG). It is the ethos of moving to a more sustainable business model by considering a range of ESG factors, such as employees, the environment, supply chains and the wider community in which an organisation or an enterprise operates.

ICAG’s key perspectives on Organisations’ responsibilities to raise ESG awareness and performance

  • Why is ESG important?

Organisations are coming under pressure to improve their ESG performance. In particular, clients, suppliers and employees want to understand what is being done in practice to ensure that businesses are being operated sustainably in a way that decreases their negative environmental (including carbon footprint) impact and increases the positive social impact.

From a recruitment and HR perspective, candidates and employees are placing higher priorities on sustainability standards when looking at companies to apply to. In the coming years, more and more employees will query what policies an organisation has in place, whether it has a modern slavery statement, what it is doing to lower its environmental impact and whether it is looking at its supply chains, and how it is updating its investment strategies and associated business plans.

Clients and investors, particularly larger organisations which are under higher scrutiny, are increasingly using evaluation processes which include ESG as a factor when deciding which businesses to invest in and/or to provide services.

By focusing on real and measurable ESG actions, and not just box-ticking, organisations can create distinct advantages over their competitors.

  • What should the organisations be doing?

The United Nations (UN) has outlined 17 Sustainable Development Goals (SDGs) to promote global prosperity and sustainable living (Home – United Nations Sustainable Development). The SDGs demonstrate how the different elements of ESG intertwine and how engaging with one SDG can have a positive impact on the other goals.

In the first instance, companies can perform a review of their practices to determine which ESG goals they want to focus on achieving. It is unfeasible for organisations to support all 17 goals equally at the same time and, instead, many are choosing to pick four or five goals that they want to focus on. For example, an organisation may decide to focus on the following UN SDGs:

  • SDG 4: quality education
  • SDG 5: gender equality
  • SDG 6: Clean Water and Sanitation including investments that curbs water carbonisation
  • SDG 12: responsible consumption and production
  • SDG 13: climate change.

Some other SDGs which are also relevant to employers include reduced inequalities, economic growth, sustainable cities and communities, and good health and well-being.

Once the SDGs have been chosen, the organisation needs to consider how it will achieve these goals. This includes coming up with targets that it would like to achieve, such as improving recycling in all offices by 40% by 2025 or becoming carbon neutral by 2030.

As an employer, it is beneficial for an organisation to engage with employees and to involve them in ESG initiatives. An initial step could be to ask employees to take part in a survey to determine what they consider to be important. The organisation can then use the results of the survey to decide what the initial focus should be. At ICAG, we have performed 50+ of these ESG surveys and can assist an organisation to design and deliver a tailored outcome.

However, ESG is not something that can necessarily be implemented overnight, and it can take time to see the output of such initiatives. It can also be difficult to measure the impact. There are, however, a number of things that employers can be doing to improve their ESG performance.

  • Environmental

Organisations need to be aware of their environmental impact. This doesn’t just mean making sure that any buildings it occupies operate a recycling scheme. It means considering the organisation’s entire carbon footprint, which is the total amount of greenhouse gas emissions a company is responsible for both directly and indirectly. This includes looking at everything from waste, energy consumption, business travel, employee commuting, suppliers etc. and then working to make reductions.

For instance, when reviewing any policies and procedures relating to business travel/company cars the following could be introduced:

– a minimum distance flight policy – electric car requirement for company cars – public transport instead of taxis (subject to health and safety exceptions)

When booking travel, employees should be asked to consider alternative options to flying, such as trains etc or whether the travel is really required (ie can the meeting be done online); and, if it is required, what class of travel is required. Most people might not think different levels of travel class have different amounts of carbon footprint; however, the level of carbon footprint is much larger for business class travel than economy. In fact, the equivalent greenhouse gas emissions are more than twice as high for each mile travelled in business than economy.

There is a lot to consider beyond areas like building operations, recycling and travel. For example, there are also the effects of previous environmental initiatives, such as the impact of the reduction of paper usage in offices in the last ten years. This extensive decline in the use of paper has been assisted by the increased use of the internet and advances in technology by companies to create and store data. While the reduction in paper has led to reduced waste, use of natural resources and landfill emissions, it has also increased use of technology to send and receive emails, create documents and scrolling through social media. All of this has meant an increase in electricity to power the servers and data centres that are required to store data. Moving to store data in the cloud can help with emissions from data centres as many cloud service providers such as Google and Microsoft have their own ambitious goals to power their data centres through renewable energy and increase efficiency in their operations.

These are just a few examples, and there are many more areas organisations can consider, when it comes to its environmental footprint, but employees can help to achieve those goals. Policies could be introduced or amended (such as in a whistleblowing policy) to cover disclosure of climate issues and non-adherence to the climate or sustainability policies of the organisation. By making employees aware, involving them in the process and showing the commitment of the organisation to work towards minimising emissions as much as possible, it will in turn make them more aware of their own footprint.

  • Social

The Social aspect of ESG considers the impact of actions on human rights, local communities, employment, health and safety, privacy and data protection. This section is going to focus specifically on employees.

Following the pandemic, there has been a shift from working in the office full time to hybrid working or working from home entirely. This has had varying impacts on employees and employers, with some employees developing anxiety around going back into the office and employers having the cost of running near-empty offices.

Employers are increasingly querying how they can get employees back into the office and what they can be doing to improve mental health and wellbeing. It is important to consider your workforce, your business and what can realistically and economically be put in place. As mentioned above, a survey is a useful tool to involve employees in this process. Some suggestions may include:

  • free fruit in the office kitchen once a week
  • cycle to work initiatives
  • increased social activities (such as a sports team, quiz nights and/or monthly pizza night)
  • a breakout space for employees to take some time away from their desk
  • allowing variable working patterns to assist with childcare and avoiding peak travel times
  • introducing volunteering days
  • organising events to raise money for charity which also engages employees eg walking or exercise charity events
  • implementing mental health first aiders

Increasing or implementing initiatives such as this can help to boost team morale as well as support the physical and mental health of employees. At the same time, this can have an impact on the Environmental and Governance aspects of ESG.

  • Governance

The focus of Governance is to review how organisations are governed by their management, executives and board of directors. Governance can cross paths with the Environmental and Social aspects of ESG, in that it is management that direct an organisation’s attitude toward climate change, carbon footprint, and the steps it is taking to reduce carbon emissions and reduce energy consumption. From the social aspect, Governance can relate to ensuring diversity and inclusivity in the workplace, compliance with employment legislation, reasonable salaries and benefits for its employees.

In addition, Governance looks at how a company is engaging with laws relating to anti-bribery, anti-facilitation of tax, money laundering and modern slavery. Organisations should have policies in place which outline each of these and ensure that employees are aware that it has zero tolerance for any breaches of these policies.

  • What challenges might organisations face

ESG is a highly important topic and, if organisations refuse to engage or if they ‘greenwash’ their ESG impact, it can have a huge impact on both internal and public perception. Greenwashing is a marketing tactic which organisations use (by providing false or misleading information) to attract environmentally conscious investors, customers, employees etc.

If companies are found to be greenwashing their ESG impact, this can lead to:

  • reputational damage and potential backlash from the public
  • disengagement of employees leading to low productivity and potential grievances
  • if it is a public company, it could lead to disenfranchisement of shareholders
  • loss of client tenders and new business.

Author: Subas Roy, CEO at ICAG Partners (subas.roy@icagpartners.com)