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ESG Best Practices

ESG

 

Environmental Social and Governance (ESG) Best Practices for Corporate  Sustainability 

Latest news from around the globe, Independent researches from major institutions and rising expectations from Shareholders and Stakeholders make it obvious that Environmental, Social and Governance concerns are vital factors for Corporate Sustainability. Faced with these Challenges, Risks and Opportunities, Boards globally have started to review their Sustainability Strategy, Operational and Reputational Risk and Regulatory Compliance.  However, Organizations are moving at varied speeds in addressing ESG concerns, with the strategic importance of ESG varying widely by Company and by Industry. An Innovative and Agile approach towards ESG performance creates opportunities for Companies to set themselves apart due to reduced Operational Risk, lower cost of Capital and reduced Operating costs through improved natural-resource management.

 

ESG (Environmental Social and Governance) concerns are increasingly becoming a priority at Board agendas, and so it becomes relevant to discuss how ESG functions can be effectively and efficiently managed using the amalgamation of three key factors : Technology, Culture and the right “Tone at the Top”.

 

1)   Technology  : Leveraging Automation and Artificial Intelligence

For Sustainability, Resilience and for navigating the expanding Risk universe more effectively, ESG Risk, Compliance and Governance need to be tackled with an Agile and Innovative mindset.  A shift from traditional Risk Assessment techniques to a more innovative, automated and detailed framework, leveraging power of Cloud Computing, Artificial Intelligence, Customized Reports and Dashboards which can be pulled up Anytime, Anywhere and on Any Device, is what Automation, Agility and Innovation can help with.

ESG Dashboard

Artificial Intelligence driven Data analytics help viewing ESG Risks in Real-time along with important metrics like their Impact, Value, and Probability. Monitoring and mitigating potential ESG related risks with Technology features like Dynamic Reporting and Dash-Boarding, helps a Business stay on top of its ESG Risks,  focus on value generation and most importantly, avoid unexpected high-impact Risks down the line. ESG Risk Management enabled with 360 degree visibility and continuous monitoring and complemented with Geo-spatial mapping using Google Earth and Risk Severity Analysis enables viewing Risks across multiple dimensions and various Frameworks.

 

2)   Embedding importance of ESG Performance Value into Organizational Culture

As risks have grown more complex in the current Business Landscape due to factors ranging from Globalization, Technology, Regulations, public scrutiny so on and so forth, Companies around the global are realizing that their approach to ESG related functions might need to be revisited. The escalating importance of ESG performance calls for a number of interdisciplinary and cross-functional competencies that include familiarity , intuitiveness and easy adaptability with Technological and Process advances and an understanding of emerging trends in ESG and their impact on Business and the Industry segment. Effective performance on ESG issues at all levels of Organizational hierarchy, right from the Board and C-Suite, to Senior management, to Risk,Compliance and Audit teams, leads to substantial benefits that can increase investor confidence, enhanced brand reputation, lower insurance payments, lower operational costs and avoidance of non compliance penalties. Hence, ESG functions cannot be treated in Silos, but has to embedded in the Company Culture.

 

3)   Agile Execution of ESG Strategy : Having the right Tone at the Top

Boards need to assess and re-assess the readiness quotient of the top teams in terms of adapting to the changing Business requirements. An effective and agile ESG Performance Framework can help a Board look at the total impact of the Company’s ESG strategy and Operations. Equipped with Real-time and accurate data, the Board and C-suite can have a far better understanding of the Company’s ESG Performance. The Top team need to ascertain that the Senior Management and the C-Suite are systematically monitoring ESG performance, looking for ways to turn ESG into a competitive advantage and regularly Reporting to the Board on the status of ESG Performance in the Company.

 

When ESG Risk Management and Compliance are looked at as a Competitive advantage rather than a check-the-box activity, that’s the point where Companies can not only stay in alignment  with Sustainability processes, but can also induce trust and build positive relationship with Customers, Investors and Stakeholders, which is an important aspect of Organizational growth.

 

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