From ESG Standards to Practice: Thinking Outside the Office

European medium to large companies globally are expected to be more and more compliant with international corporate disclosure frameworks such as the EU Corporate Sustainability Reporting Directive (CSRD). ESG standards are becoming a common reflection process for sustainability practitioners. Especially considering the typical hectic office work scenarios after a sustainability and audit department begins to finalize its financial year-end reporting.

ESG (Environment, Social, and Governance) reporting is pursued by the business world and the higher education sector. If businesses commit to ESG actions, their operations are backed up by sustainability metrics, which add value to their business entity.

You may be enlightened to discover that ESG standards can work differently for universities. This is the same for small and medium enterprises (SMEs) and startups. If you are interested in stepping into the ESG assessment process for your professional affiliation or work initiative, there are detailed procedures to do so. To begin with, ESG principles can be tailored to the unique characteristics and priorities of a company or organization.

Rethinking the Basics of ESG Standards

Frameworks for Compliance

ESG standards compliance requires a validated framework and reporting standard that befits the profile of a business. The nature of risks assessed in an entity will determine the choice of framework and standards. More prominent frameworks include the Global Reporting Initiative (GRI), Sustainability Accounting Standards Boards (SASB), and the International Integrated Reporting Council (IIRC). Each of these different frameworks and standards provides structured criteria for effective ESG assessments and reporting.

In this article, we will understand what ESG components to consider for individually operated businesses, SMEs, startups, and non-profit entities.

ESG Standards Involve Creativity

In ESG assessment phases, the "low-hanging fruit" often becomes the primary focus of a stakeholder. For example, strategies associated with the reduction of greenhouse gas emissions, optimizing environmental footprint and providing a safe or healthy work environment for employees. The majority of global entities typically report examples of ESG assessments and their impacts. While sustainability managers methodically pursue ESG standards with care. The process entails understanding both the short-term and long-term business plans.

Here are some precious advice which you can not often find in a guide or handbook:

🖊️ Leverage Active Assets

Smaller enterprises, early-stage businesses, and non-profits have much more limited physical assets compared to medium—to large companies. Hidden opportunities exist for uptaking ESG strategies by utilizing active assets, such as digital assets and leased business facilities. If cloud computing solutions or digital office tools are embedded within your workplace, these operations can be treated as part of the environmental indicator. Meanwhile, leasing energy-efficient offices or carbon-neutral facility spaces can substantially contribute to environmental-related impacts.

🖊️ Perform ESG Investing

Instead of pressuring business transformation to comply with an entire ESG plan, a business entity with limited funds can innovate its capital planning and investments. Smaller businesses and non-profits can manage ESG programs with various cost structures. High-impact socio-environmental initiatives should be prioritized in ESG investments. At the same time, for smaller enterprises, accessing cost-effective ESG instruments at financial institutions or local funding agencies. Larger firms also have their own ESG programs, which offer attractive ESG-invested programs, where smaller companies or startups can contract linked bonds and ESG shares or co-share an ESG program.

In our previous article, we have also mentioned volunteering. Small enterprise can uptake social-environmental volunteering programs to kickstart your ESG performance.

🖊️ SDG 17 to Mobilize Resources for ESG Standards

Both ESG strategies and ESG reporting can be laborious tasks that require the support of different participants associated with a firm's business. A successful ESG strategy is more likely to happen with a strong financial standing to manage the long-term cost. At the same time, an effective ESG practice requires permanent participation from all stakeholders, including employees, clients, investors, and partners.

In this sense, embedding SDG 17 – “Partnership for the Goals”—in the early phases of assessing, planning, and practising ESG standards is a crucial step to permit a smaller firm to endure ESG commitments. This means forming partnerships, implementing a shared manifesto with other stakeholders, and forming permanent business relations. Alternatively, co-sharing resources can improve the likelihood of a successful ESG performance.

🖊️ Flexibility in Human Resource

For starting businesses, small enterprises, and non-profits, it is essential to implement flexibility in employees' skills and to enhance employees' motivation to participate in ESG practices. Compared to medium to large corporates, small entities have opportunities to quickly adapt to strategic transition plans. To be a leader of ESG standards, it is crucial to upskill employees, which also counts as social indicators. In other scenarios, employees need to adapt to sustainability responsibilities. On the other hand, smaller firms can gradually grow their sustainability commitments depending on their available human resources.

🖊️ Systematic Planning Comes First

Some entities may consider taking the integrated approach when incorporating ESG considerations into all business operations. Considering that the scale of ESG-driven initiatives or programs is less elaborate than large corporates, systematic planning of ESG initiatives and ESG solutions could better fit for smaller firms or non-profits.

This means taking a step-by-step approach when assessing the opportunities and risks for ESG impact monitoring. A systematic methodology allows smaller firms to establish appropriate ESG models and have a detailed inspection of various ESG factors.

Best Practices for Startups & Non-profit

How about referring to some best practices and case studies of existing ESG strategies?
The following resources provide insights which can guide your starting journey on ESG standards:

• Checkpoint “An AI and digital driven company”
  
  Though with varied co-sharing work office spaces and operating since the year 1993, this company only published its first ESG report at the year 2022. The first report detailed interesting ESG impacts.
• Charities Property Fund “A UK based Funding Body”
  
  The funding body provides insight into its unique ESG integration in its sustainability report.
• We Forest “A European Forest Conservation Organization”
  
  The organization published a brief guidance e-book for ESG reporting. This e-book offers fundamental perspectives on ESG reporting regulations and NGO frameworks.
• Siemon “A US-based family operated company”
  
  This company showcase recent ESG commitments with exemplary ESG performance earning the accreditations from third party responsible business reporting agencies.
• Petco “A health and wellness company for pets”
  
  This company showcase a portfolio of ESG pillars and principles in the sector of wellbeing and health.
• Climcycle “An ESG Software Suite”
  
  This uprising company provide an all-suite ESG digital tool to support ESG compliance and reporting.

Getting More Literate on ESG Standards

Image from Pixabay.com

The literacy efforts don’t stop at company discussions or through conferences and podcasts. Reading more useful resources can provide up-to-date content about ESG standards and methodologies. It is vital to know that ESG compliance varies for every country and geographic region. One rational reason is the standardization of local sustainability reporting and alignment with local regulations and local financial policies. Here are some identified resources which you can explore to learn more about ESG standards:

i. WBCSD ESG Handbook Disclosure

This handbook, which includes the outcomes of EU Corporate Sustainability Reporting Directive deliberations, is highly useful and credible to find.

ii. GRI and SASB Guide to Sustainability Reporting

This is a must-read as it provides an overview of the basics of an international standard in ESG.

iii. Kye Gbangbola & Nicole Lawler Gold Standard Sustainability Reporting

From a more academic approach, this textbook provides step-by-step processes in sustainability reporting.

iv. Invest Europe ESG Due Diligence Guide

This short guide provides an inquiry-based approach to allow any enterprise or company size to evaluate
its ESG phases and transition pathways.

v. Foundation XBW ESG Leader’s Comments

This book includes segmented comments by leaders of small and medium enterprises (SMEs).  It is a layback resource for those in small businesses or startups.

Final Remark

If you are a small-scale company, in the early stages of a business, or part of an entity with an interest in ESG standards, this article's insights can relate to your back-to-office tasks. By considering these perspectives, the ESG journey is more comfortable in practice versus feeling restricted by formal criteria during the first process of ESG assessment. Keeping an open mind about navigating informal paths to enhance your ESG portfolio gradually will strengthen your business and make it nearer to regulatory compliance. Keep an eye out for future articles on the subject of sustainability reporting.