Yesterday, finance ministers, international finance institutions and the financial services sector met at COP26 to discuss global finance for climate action.
To meet the commitments made in the Paris Agreement, countries made new commitments to increase finance to support developing countries to deal with the impacts of climate change.
The UK Chancellor also announced plans to ensure that the UK’s financial centre is aligned to net-zero.
Climate change is a pressing and vital issue for everybody. It is one of the many environmental subjects of Environmental, Social and Corporate Governance (ESG) criteria. COP26 has demonstrated that all organisations need to become more transparent on ESG.
So what should smaller firms be doing to set their ESG goals and targets?
Firms can start by defining ESG - for example, making a conscious decision-making process concerning an organisation’s impact on the environment and how it values people, from employees to supply chain and its role in broader society.
For companies trying to be more transparent about their ESG impacts, the following lists are some of the things included across each of the ESG categories:
- Climate change impacts
- Greenhouse gas or carbon emissions/carbon footprint
- Air quality impacts
- Water quality impacts
- Energy efficiency
- Efficiency in resource usage
- Impacts on deforestation
- Waste produced (including emissions, electronic waste, material waste, etc.)
- Diversity, Equality, Inclusivity
- Labour standards
- Data protection for both consumers and employees
- Community involvement and community relations
- Safety measures
- Customer satisfaction
- Compensation fairness
- Whistle blower programs
- Competitive behaviours
As you can see, there are a lot of potential data points here, making it complex to report ESG. The problem facing companies isn’t so much the need for transparency, it’s the lack of standardised methods for measuring ESG.
Businesses can utilise ESG reporting to show their commitment to the firm’s values. In addition, it can help to show potential employees and customers why they should believe in the organisation.
All firms should consider making preparations to report on these topics if they’re not doing so already.
If you require help setting your ESG management framework, ESG policy statement, scorecard and reporting, IHRS can work with your business. For more information, please get in touch with our team via email at HRhelp@ihrsolutions.co.uk, call 01604 709509 or visit the IHRS website.