How to Accelerate ESG Compliance in 9 Steps

ESG Compliance Is Here To Stay

ESG Compliance is here to stay – it’s tough to debate against this claim in 2024. Increased greenwashing concerns in recent times have only added strength to this argument. Almost every company’s board of directors have started insisting on a thorough ESG strategy, which has escalated to organizations ramping up their ESG compliance efforts. In this blog, we will outline the exact steps you need to follow to implement a successful ESG Compliance Strategy in 2024. 

ESG Compliance Maturity

Implementation of an ESG (Environmental, Social, and Governance) vision for a company is not a one-off activity. It is an ongoing journey with stakeholders from many different departments.

Verdantix, an independent ESG research firm has identified 4 stages an organization goes through in their ESG compliance maturity. (See Image 1 below, source: Verdantix) 

Image 1: ESG Maturity Stages

Source: Verdantix Research

Stage 1: Compliance & Reporting

ESG strategy is focused on compliance and meeting ESG and sustainability regulations. ESG protects against legal risk, greenwashing accusations and financial penalties.

Stage 2: Performance Optimization

ESG strategy is focused on managing resources efficiently and reducing operating costs.

• The C-Suite sees ESG as an opportunity to improve operational strategy.
• CFOs and COOs are critical roles in defining ESG strategy and sustainability budgets.

Stage 3: Stakeholder Alignment

Firms proactively seek to ensure positive engagement with stakeholders.

•  The C-Suite and Board view ESG as a means of enhancing competitive advantage in the short term.
• Firms’ communication and disclosure strategies centre on improving the transparency of ESG initiatives.
• CSOs play a critical role in identifying risk and opportunities to drive sustainable performance.

Stage 4: Leadership & Purpose

ESG is focused on embedding ESG factors into business strategy, purpose and corporate culture.

• CEO’s vision strongly influences ambitious ESG goal-setting, demonstrating industry leadership.
• ESG is part of daily decision-making in all business units.
• The C-Suite and Board consider ESG and sustainability as success factors in achieving long-term business value creation, innovation and resilience.

Where Does Your Organization Sit on this Spectrum? 

Take our short quiz here to evaluate & rate your ESG efforts. The ESG Maturity Quiz provides you with a report to help understand your next steps to accelerate your ESG strategy.

Accelerate Your ESG Strategy

Based on our market research with industry leaders who have implemented the most successful ESG Compliance strategies, we have mapped out 9 critical steps to accelerate your company’s ESG Compliance journey. (See Image 2 below, Source: Compliance & Risks)

 

Image 2: ESG Compliance Journey 

Source: Compliance & Risks

1. Understand Your Mandatory Obligations – Know Where To Start

Given the extensive amount of activity in the ESG space, it’s essential to prioritize the legally binding obligations that are most significant. It is recommended to start with the fastest-approaching deadlines for mandatory obligations that your business would be subject to.

Key Stakeholders: Sustainability & Compliance teams.

2. Set Your ESG Goals & Targets

An alignment of organizational priorities and fast-approaching mandatory ESG deadlines would be the right foundation for your company’s ESG strategy. Setting a few high-level ESG goals with multiple targets feeding into each goal is a recommended approach to proactively work towards achieving ESG compliance. 

Key Stakeholders: Sustainability & Compliance teams in agreement with the Senior Management team of the organization.

3. Collect Your Data & Agree On An ESG Reporting Framework

After you’ve established your goals and targets, the next step is to focus on your data infrastructure needs. This involves identifying your ESG reporting requirements and determining the various data points required across different frameworks.

Key Stakeholders: Sustainability & Compliance teams 

4. Align Your Teams

The primary obstacle we’ve heard from the market is achieving alignment across all stakeholder teams, which is the most critical step in preventing any unexpected ESG compliance issues down the line.

Key Stakeholders: Sustainability, Compliance, Product, Engineering, Supply chain vendors and any other relevant stakeholders 

5. Track & Report On Progress

After achieving optimal alignment and collaborating to develop a seamless ESG data infrastructure, the next step is to consolidate all relevant data to track progress towards each ESG goal and related targets, ultimately enabling you to create effective ESG reports.

Key Stakeholders: Sustainability, Compliance, Product, Engineering, Supply chain vendors and any other relevant stakeholders 

6. Report To Investors, Shareholders, & Customers

After the data points are collected, teams need to work with the ESG reporting frameworks to report to investors, shareholders and customers as needed. 

Key Stakeholders: Sustainability, Compliance & legal teams 

7. Monitor Regulatory Changes

The ESG regulatory landscape is ever-evolving and there are always multiple regulatory updates and more enacted deadlines that a company might be obliged to. It is important to always monitor the regulatory landscape for any updates to ensure you can stay on top of all legal requirements.

Key Stakeholders: Sustainability, Compliance & legal teams

8. Understand The Impact Of Changes

If there are new regulatory updates, the relevant sustainability teams need to assess and interpret the regulation to help the company to successfully oblige to the reporting requirements. 

Key Stakeholders: Sustainability, Compliance & legal teams

9. Adjust Goals & Targets

Any regulatory update will have an impact on the overarching ESG strategy and it’s important to keep iterating and feeding back to the ESG goals and targets to ensure nothing slips through the cracks. 

Key Stakeholders: Sustainability & Compliance teams 

Accelerate Your ESG Journey with Compliance & Risks

Compliance & Risks’ ESG Solution helps you seamlessly implement a company-wide ESG strategy by providing an overview of mandatory reporting obligations and mapping these to your ESG goals. Along with that, you can research, collaborate and align with stakeholders, track progress towards their ESG goals and targets, and demonstrate compliance to evolving regulatory requirements.

Our ESG Solution enables you to manage your ESG program by:

• Staying on top of evolving ESG Regulations. 
• Setting and managing your ESG goals and targets.
• Demonstrating ESG compliance with evolving regulatory & external stakeholder requirements.

Stay on top of evolving ESG Regulations: Ensure ‘Zero ESG Surprises’

• Stay ahead of the compliance curve by effectively monitoring regulatory changes for ESG obligations. (See Image 3 below, Source: ESG Solution by Compliance & Risks)
• Improved Compliance: Meet your mandatory ESG reporting obligations, and reduce Corporate Risk

Image 3: Upcoming ESG Deadlines

Source: ESG Solution by Compliance & Risks

Set & manage your ESG goals and targets – Unify Organizational ESG Progress

• Share measurable progress toward your ESG goals to create transparency, provide assurance, and drive stakeholder business value. (See image 4 below, Source: ESG Solution by Compliance & Risks)
• Build long-term business resilience by contributing to long-term sustainable growth and value creation for the business, and for society and the environment.

Image 4: ESG Goals & Targets 

Source: ESG Solution by Compliance & Risks

Link Regulations to your ESG Strategy

• Identify upcoming ESG Regulations 
• Stay on top of ESG Regulatory changes 
• Manage evidence to prove compliance
• Interpret regulatory requirements affecting your ESG strategy

Image 5: ESG Regulations linked to ESG Goal Progress

Source: ESG Solution by Compliance & Risks

Take the first step towards a more sustainable future for your business with our innovative SaaS ESG solution. See for yourself how our platform can help you track and improve your ESG performance, meet stakeholder expectations, and stay ahead of the competition. 

Don’t miss this opportunity to learn about the latest technology and best practices in ESG management!

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