ESG: an elementary approach

There is a lot of focus on ESG factors as sustainability is prioritized to attain the SDG goals advocated by UN by achieving the twin pillars of "Decarbonization" and "Net Zero" to successfully manage the “The Energy Transition”.

Paris 2015 aka COP 21 is being aspired by many (not everyone though).

So, what are the steps a company can follow which will be helpful to align itself to regulations in any jurisdiction with respect to ESG norms?

1. Create a sustainability management team which includes specialists from various fields like energy, environment, sociology, data science, software, hardware, liaisoning, project & risk management etc.

2. Collect, Measure, analyze data to give the ESG paradigm a shape. The data needs to be baselined, compared, benchmarked, shared and reported towards adherence in various jurisdictions.

3. The key parameters to be considered for ESG evaluation

These will provide a base and will help to cater the main requirements mentioned in various frameworks and guidelines under different jurisdictions.

4. A key step is Calculation of various data points before the final reporting stage.

You need to calculate the Double Materiality i.e. the impact of climate risks on company's financials (Financial Materiality) as well as the impact on the ecosystem, environment, society etc. due to the company's actions (Stakeholder Materiality).

The scope of Circularity or the contribution of a company in the circular economy needs to be ascertained and inculcated to make its operations sustainable in long run (this is crucial).

5. How to implement these actions

This exercise requires voluminous amounts of data to be collected, refined, analyzed, compared and to be presented. Hence modern digital tools and concepts like AI, Machine Learning etc. becomes a prerequisite to improve efficiency and reduce human errors.

Collaboration is and will remain a key factor in this journey.

6. What and how to report /disclose /present /share

a whole set of frameworks and standards exist (global and regional) to guide corporations and to adhere,

follow the one which is relevant and suits your company (in case voluntary), otherwise

Net Zero and climate targets to be reported with plans to achieve and mitigate.

A lot of third-party service providers collect ESG data and provide rankings about companies globally to assess their ESG progress and provide comparison between leaders and laggards.

We need to keep in mind that ESG costs time and money and it is going to be a must for all down the lane.

Better be prepared than regret.............