Four steps to improve your ESG performance via an Integrated Sustainability Management System.
by Nikos Avlonas
Your boss gets a note from a board member asking why your company has such a low Moody’s ESG rating. You’re the sustainability manager, so you get asked why. In frustration, you point to your pile of surveys from customers and stack of questionnaires from ratings agencies sitting next to the mountain of sustainability guidelines.
How do you traverse the mountain?
First, get feedback from your 3 to 4 most important financial powers. Does the board member represent the investors with the most influence? Does the most influence come from key clients? Which reports are they asking for? The response will differ sector by sector, making a sector benchmarking and materiality analysis vital.
Second, analyze the relevant questionnaire or guideline for gaps in your reporting. If the guideline most valued is SASB, expect an emphasis on finance. If the most relevant ESG questionnaire happens to be the CDP, expect a lot about climate disclosure. If your report is from a major retail client, expect questions about your supply chain.
Third, using one most relevant format, figure out what gaps you need to cover, either with better reporting or by addressing the gap at all. Avoid duplication. If you are asked to address multiple standards, complete one and find where it complements the others. Then address any extra concerns.
Fourth, integrate the criteria of your dominant standard into your reporting – for all those ratings agencies which never interact with you in any form.
The person hours of trying to meet the standards or expectations of every guideline, standard or rating agency are prohibitive.
You need an integrated sustainability management system. The system’s foundation is the best standard for your industry and even sub-sector. Distinguishing the best one takes experience and expertise. CSE can help you identify the best standard for your organization, link the chosen standard to others which may be relevant, develop a list of topics you need to address and assist you in avoiding considerable duplication.
Four steps are fairly simple. The challenge is in the volume of detail. There is a lot to do! Get started early, in as streamlined a manner as possible. CSE experts, with hundreds of variations of forms and questions in their portfolio, can be an immense help. You want to rise in the ratings, not drown in the minutiae!