10 Reasons to Track a Corporate Carbon Footprint
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In this article, we’ll explain what a corporate carbon footprint is, why it’s important, how it is measured, and reasons why your company should track it too.
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ESG Certification: Does It Really Exist?
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As organizations worldwide embrace more rigorous sustainability frameworks and climate related financial disclosures, forward-thinking companies are seeking to strategically integrate ESG principles and ESG strategies to demonstrate their measurable commitment to environmental reform and ESG criteria – but what exactly constitutes as proper ESG certification?
According to sustainability experts, an ESG certification can effectively validate your organization's dedication to environmental, social, and governance criteria — but navigating the complex landscape of sustainable business practices requires an in-depth understanding of ESG initiatives and the certification process to know which ESG certifications are actually worthwhile.
In this article, we’ll provide an evidence-based overview of ESG, analyze whether ESG certificate is worth acquiring, and offer expert guidance on which ESG certification may be right for your company.
What is an ESG certification?
An ESG certification provides companies with ample knowledge on how to manage ESG funds and other business activities related to environmental, social, and governance factors.
Acquiring an ESG certification can help your company to gain a competitive edge in the midst of a global push for sustainability, improve communication with your stakeholders, help to better manage your suppliers, and more.
ESG has become one of the most important identifiers for businesses today as it remains a key indicator for how well a company works to comply with stakeholder expectations, comply with environmental regulations, navigate risk management, and employ long-term sustainability efforts.
“ We argue that ESG strategies should be valued for the unique benefits that they can provide, such as making a positive impact on the environment or society, as opposed to being promoted on the basis of disputable claims regarding their out performance potential. – (EDHEC Climate Institute). ”
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Understanding ESG Factors
Here’s a breakdown of ESG factors:
- Environmental – This aspect of ESG encompasses how a company's business activities impact environmental aspects of our planet, including their contributions to air pollution, water resource management, carbon footprint measurement, and strategic implementation of energy efficiency or renewable energy technologies.
- Social – The component of ESG addresses how organizations uphold human rights standards, implement fair labor practices, engage with surrounding communities, and develop inclusive policies that address social and environmental issues affecting their stakeholders.
- Governance – This part of ESG indicates how a company is structured and managed, including their efforts to adhere to accountability frameworks, commit to transparency, employ ethical practices, and capacity to comply with increasingly stringent environmental regulations.
As delineated by several independent assessments, validating performance across these diverse criteria through contrasting certification systems presents significant challenges. Consequently, many progressive organizations pursue comprehensive ESG certification frameworks that holistically demonstrate their integrated commitment to ESG considerations across all operational dimensions.
Why ESG Certification Delivers Strategic Value
An ESG certification is worth it for any businesses looking to demonstrate their long-term commitment to sustainability alongside a goal to improve their profit and overall brand recognition, as acquiring an ESG certification can help to attract new talent, customers, and business partnerships.
According to a report from the European Banking Authority (EBA), organizations seeking to enhance their environmental governance, risk management strategies, or ESG investments typically realize significant returns from proper ESG certification – making the sometimes intensive process demonstrably worthwhile for improved corporate sustainability, responsible investing, and investment portfolios.
Independent research confirms that remaining aware of ESG trends, social responsibility, and committing to an ESG certification requires a comprehensive, long-term dedication to implementing sustainable practices across your entire organization, coupled with the agility to adapt these practices to maintain compliance with evolving certification standards.
“ At its core, ESG is about identifying societal factors that materially affect business success and managing these as business opportunities and risks. – (Insead Knowledge). ”
What will happen when your company pursues an ESG certificate?
Here are just a few of the things a company may learn while undergoing the process to acquire an ESG certification:
- Developing evidence-based approaches to optimize ESG investments
- Tools to uncover underlying issues within your business related to ESG
- Gain tools to better understand global sustainability initiatives
- Improved understanding of the current ESG market
- Expertise in how to address material impacts
- Conduct improved ESG analysis and assessments
- Analyze ESG factors and adjust them accordingly to improve business performance
Leading business schools such as the University of Pennsylvania demonstrate that pursuing ESG courses and ESG certification equips organizations with enhanced capabilities to address complex sustainability challenges while simultaneously creating measurable competitive advantages that support long-term business resilience and market performance.
Navigating the ESG Certification Landscape
While there are various ESG certifications available, there is no universal ESG certification – such as how there is a universal standard for setting emission reduction targets with the SBTi.
Although ESG reporting experts emphasize that although there is no single universal ESG certification, organizations have discovered several credible pathways to validate their sustainability performance – including comprehensive certification with SGS or specialized ESG leadership development through institutions like Oxford.
Since there is no standardized framework for ESG, organizations who offer ESG certifications will develop their own guidelines based on various criteria – such as by following the criteria depicted in the United Nations Sustainable Development Goals or the Corporate Sustainability Reporting Directive (CSRD).
Case Study Example of ESG Certification with Corporate Finance Institute
The Corporate Finance Institute offers a notable ESG certificate program designed to assist professionals in the development of more advanced business intelligence capabilities to further address complex ESG issues.
This certification provides participants with specialized knowledge in developing adaptive business models, implementing robust governance frameworks, and accurately measuring environmental impact.
Research indicates that professionals who complete this certification will be able to demonstrate improve capabilities in navigating the evolving regulatory landscape while also helping their organization to turn sustainability challenges into strategic advantages.
Completing an ESG courage with the Corporate Finance Institute (CFA) will entail the following:
- 11 required courses
- 3 practice labs
- 30 to 35 hours of ESG course work
Ultimately, an ESG certification should validate a company’s efforts to rectify their current activities related to environmental, social, and governance.
Leading sustainability consultants have noted the absence of a single comprehensive ESG certification has resulted in future-focused companies pursuing more than one ESG-based certification, such as those offered by the GRI, SASB, CDP, ISO 14001, B Corp, and additional sector-specific certifications aligned with their strategic sustainability objectives.
These ESG certifications are frequently complimentary to one another and can help to improve business operations, mitigate risks, and meet evolving demands from ESG experts.
The table below will compare and contrast current ESG certifications on the market:
| Certification | Focus | Pros | Cons | Best Suited For |
|---|---|---|---|---|
| Global Reporting Initiative (GRI) Certification | Sustainability reporting and ESG integration |
- Global recognition - Enhances transparency in ESG disclosures - Widely used framework |
- Can be complex and time-consuming to implement - Mostly reporting-based, less focused on actionable investments |
Sustainability professionals, CSR managers, compliance officers |
| CFA Institute Certificate in ESG Investing | Integration of ESG factors into investment decisions |
- Tailored for financial professionals - Highly reputable within the finance industry - Practical focus on ESG in investments |
- Limited to financial sector focus - Requires prior knowledge in finance |
Investment managers, portfolio analysts, financial professionals |
| Sustainalytics ESG Fundamentals Certification | ESG analysis and sustainable finance |
- In-depth training in ESG - Broad application for finance professionals - High demand for professionals with these skills |
- Primarily finance-focused - Requires ongoing updates with new ESG regulations |
Investment professionals, analysts, and ESG risk managers |
| Sustainability Accounting Standards Board (SASB) Fundamentals | Incorporating ESG into financial reporting |
- Industry-specific ESG standards - Focused on the financial impact of sustainability |
- Limited to financial and accounting roles - Less focus on broader sustainability goals |
Accountants, financial analysts, corporate financial officers |
| PRI Academy ESG Integration Course | Incorporating ESG factors into sustainable investments |
- Comprehensive ESG integration training - Shorter duration compared to other courses - Practical application |
- Lacks certification recognition - Mainly for beginner to intermediate professionals |
Investment professionals, fund managers, sustainability analysts |
| EFFAS Certified ESG Analyst (CESGA) | ESG valuation and integration into investment analysis |
- Europe-wide recognition - Focus on ESG metrics and valuation - Highly relevant for finance professionals |
- Primarily focused on the European market - Requires understanding of ESG financial tools |
Financial analysts, ESG risk evaluators, European investors |
| CDP Climate Change Course | Climate-related risks and environmental disclosure |
- Focuses on climate risks - Highly relevant for environmental disclosure and sustainability |
- Limited focus on social and governance aspects - Primarily environmental-centric |
Executives, sustainability professionals, risk managers |
What are the pros and cons of an ESG certification?
There are several pros and cons to acquiring an ESG certification, such as the ability to improve risk management, attract ESG-focused investors, or to gain a competitive advantage – but pursuing an ESG certification could be costly and boost potential skepticism of greenwashing.
Advantages of ESG Certification
Here are some of the pros of acquiring an ESG certification:
- Greater Trust & Accountability – According to the Task Force on Climate-related Financial Disclosures (TCFD), an ESG certification can significantly enhance your company's performance metrics regarding sustainability commitments – which can help to build deeper trust with stakeholders and employees. This also helps to ensure that businesses remain transparent regarding their actions, and that comprehensive frameworks for organizational accountability.
- New Investment Opportunities – Various research and studies, such as OECD Business and Finance Outlook Report, demonstrate that companies with verified ESG certifications are more likely to consistently attract ESG-focused investors, which can allow for new funding opportunities to strategically expand your business.
- Improved Risk Management – Several studies confirm that ESG certifications help to encourage improved environmental practices and acute attention to governance issues, which can help companies to develop more robust risk management capabilities – particularly enhancing organizational resilience against climate-related disruptions, such as natural disasters, and regulatory changes.
- Regulatory Compliance – Studies on sustainability metrics from the OECD reveal that comprehensive ESG certification programs equip companies to proactively address current compliance requirements, which can help them to prepare and comply with upcoming regulatory developments – as certification standards in various ESG certifications depict forward thinking in sustainability criteria.
Challenges of ESG Certification
- Expensive & Time Consuming – Obtaining ESG certification can be costly, as it requires both a significant financial investment and time for thorough auditing and ongoing monitoring. Consequently, this means that smaller companies with limited resources may face substantial barriers when seeking certification despite the potential community engagement benefits.
- Lack of Universal ESG Certification – Since there is no globally standardized approach to ESG measurement, multinational organizations may need to utilize multiple, diverse frameworks to achieve compliance, such as the GRI or SASB – which can be especially challenging for businesses operating worldwide across various regulatory requirements.
- Potential Greenwashing – As there is no universal ESG certification, it’s possible that customers, stakeholders, and other industry observers may critically evaluate the legitimacy of the ESG certification your company has acquired – which could lead to your company being accused of greenwashing if the certification of choice lacks sufficient rigor or standards.
- Cost-Benefit Ratio – While there have been studies, such as by McKinsey, that confirm substantial returns on ESG certification for companies in carbon-intensive sectors like energy or manufacturing, it may be more challenging for smaller businesses to justify the financial investment required to obtain ESG certification as certification costs may outweigh immediate strategic opportunities.
ESG certification can prove time consuming and costly, as indicated by business sustainability experts, meaning that organizations must conduct a thorough analyses and search to find most suitable ESG certification for your business. This entails seeking a certification program aligned with your company's specific goals, stakeholder expectations, and long-term sustainability objectives to maximize return on investment.
How to Choose the Right ESG Certification for My Company
As there is no universal ESG certification, it is important for each company to choose the ESG certification that will prove worth their time, money, and effort.
Sustainability governance experts indicate that sector-specific alignment is critical. For example, a financial institution or banking company should prioritize certifications focusing on ESG funding frameworks and sustainable investments protocols that demonstrate how ESG considerations can be meaningfully integrated into their specialized business models.
Ultimately, all companies should choose ESG certifications specific to their individual goals in order to better demonstrate how ESG can be applied to their industry-specific business – as organizations achieve optimal results by strategically selecting certifications that address their specific environmental impact profile, community engagement priorities, and governance issues rather than pursuing a one-size-fits-all approach.
Here are some of the key points to remember when searching for an ESG certification:
Diversify Your ESG Certifications & Frameworks
Since there are several organisations and frameworks that offer ESG-related certifications or assessments, it is important to acquire the certifications most applicable to your business.
Here's a breakdown of various ESG certifications in order to choose which one is most applicable to your business operations:
- Global Reporting Initiative (GRI) – This standard helps companies with ESG reporting by offering a viable framework, but does not serve as certification.
- Sustainability Accounting Standards Board (SASB) – This standard provides help for various sustainability reporting, but like the Global Reporting Initiative, cannot serve as a certification by itself.
- CDP (Carbon Disclosure Project) – The CDP can help companies to understand their carbon emissions and provide a score accordingly.
- ISO 14001 – Known as a hallmark ISO certification, this ESG certification can help companies to improve upon their overall environmental practices by improving their Environmental Management System (EMS).
- B Corp Certification – B Corp demonstrates a company’s all-around performance in sustainability, in addition to illustrating accountability for their negative impacts.
Best ESG Certifications to Adhere to Social & Fair Employment Issues
Multiple studies demonstrate that organizations prioritizing the 'S' in "ESG," particularly those in consumer-facing industries like fashion or cosmetics, can achieve significant strategic opportunities through these specialized certifications:
If adhering to the ‘S’ in “ESG” is most important to your organization, such as with fashion or cosmetic companies, your company may want to consider the following ESG certifications:
- Fair Trade – Fair Trade certification ensures verifiable fair wages and ethical working conditions, especially in developing countries, are implemented during production – creating measurable improvements in community engagement.
- SA8000 – This ESG certification, SA8000, focuses on ensuring fair working conditions are employed throughout the industrial process for a product or service, such as with documented positive impacts on worker welfare and productivity.
Best ESG Certifications for the Financial Sector
According to the Task Force on Climate-related Financial Disclosures, organizations in the financial sector seeking to employ sustainable economy initiatives should consider these specialized certifications.
If your company values sustainable finance, these ESG certifications may be right for your business:
- CFA Institute Certificate – This ESG certification is widely recognized as the benchmark for financial professionals as it enables investment managers and financial analysts to ensure their sustainable investments align with current ESG standards and help to boost overall business performance.
- EFFAS Certification (CESGA) – This European based ESG certification also provides financial professionals with evidence-based methodologies to implement sustainability metrics into their investment decision making process – which can ultimately prove beneficial ESG.
- PRI Certification – Also offering a certification course in ESG, the Principles for Responsible Investment (PRI) offers a 3-hour self-guided course to allow financial professional to gain new knowledge regarding ESG investments.
Overall, it is important to remember that while there isn’t one, universal ESG certification – there are a wide variety of ESG-related certification available for your company to validate its effort towards reform for environmental, social, and governance.
Choose Greenly to Help with ESG Challenges & Climate Related Financial Disclosures
We know how challenging it can be to choose the right ESG courses or climate related financial disclosures most suitable for your company.
Ultimately, many forward-thinking businesses will choose to certify themselves for several of these ESG certifications – but identifying which certifications will provide the most optimal results in terms of finances, regulatory environments, stakeholder expectations, and industry-specific materiality assessments can prove challenging.
At Greenly, we can help simplify this with the help of our personalized assistance, knowledge climate experts, and wide variety of resources available to our clients.
We’re here to help guide you through all of the requirements when applying to be certified for almost any ESG certification: from the CSRD, SBTi, and more.
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What About Greenly?
If reading this article on ESG certification and an ESG certification really exists has made you interested in reducing your carbon emissions to further fight against climate change – Greenly can help you!
Deciding which ESG certification to choose and apply for can be overwhelming, but don’t worry – Greenly is here to help. Click here to schedule a demo to see how Greenly can help you find ways to improve energy efficiency and decrease the dependency on fossil fuels in your own company.
Greenly can help you make an environmental change for the better, starting with a carbon footprint assessment to know how much carbon emissions your company produces.
Click here to learn more about Greenly and how we can help you reduce your carbon footprint.
Sources
Insead Knowledge https://knowledge.insead.edu/responsibility/esg-not-impact
EDHEC Business School https://climateimpact.edhec.edu/does-esg-investing-improve-risk-adjusted-performance
Research Gate https://www.researchgate.net/publication/343265964_ESG_Standards_Looming_Challenges_and_Pathways_Forward
European Banking Authority https://www.eba.europa.eu/sites/default/files/document_library/Publications/Reports/2021/1015656/EBA%20Report%20on%20ESG%20risks%20management%20and%20supervision.pdf
BAC Education https://www.bac.edu.my/bac/certified-esg-professional-programme/
Science Direct https://www.sciencedirect.com/science/article/pii/S2666791624000253
University of Pennsylvania https://executiveeducation.wharton.upenn.edu/for-individuals/all-programs/esg-executive-certificate-for-senior-leaders/
Oxford https://oxford-onlineprogrammes.getsmarter.com/presentations/lp/oxford-leading-sustainable-corporations-programme/?ef_id=c:650705074960_d:c_n:g_ti:kwd-918494153174_p:_k:esg%20certificate_m:e_a:149308422120&utm_source=google&utm_medium=cpc&gad_source=1&gclid=Cj0KCQjwyL24BhCtARIsALo0fSAjvN686O9bWt6p6yQCCt3oqlXrgeFWrnbN8M4POf_Wl9R7L1vJD3UaAiXlEALw_wcB&gclsrc=aw.ds
Corporate Financial Institute https://corporatefinanceinstitute.com/certifications/environmental-social-governance-specialist/
The Wall Street School https://www.thewallstreetschool.com/blog/is-pursuing-the-cfa-certificate-in-esg-investing-a-wise-investment/
Sustainable Business Toolkit https://www.sustainablebusinesstoolkit.com/best-esg-certification/
OECD https://www.oecd.org/content/dam/oecd/en/publications/reports/2020/09/oecd-business-and-finance-outlook-2020_e807da73/eb61fd29-en.pdf
IMD https://www.imd.org/blog/sustainability/esg-environmental-social-and-governance/
LinkedIn https://www.linkedin.com/pulse/what-does-cost-companies-become-esg-compliant-marc-kloepfel-otk6f
Sustainability Magazine https://sustainabilitymag.com/esg/esg-certification-is-critical-for-sme-vendor-sustainability
International Federation of Accountants https://www.ifac.org/knowledge-gateway/discussion/board-oversight-sustainability-and-esg
PWC Research https://www.pwc.co.uk/industries/financial-services/understanding-regulatory-developments/what-does-the-s-of-esg-mean-to-your-organisation.html
EFFAS https://effas.com/professional-certificates/effas-certified-esg-analyst-cesga/
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