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Today, starting a business with nothing but the clothes on your back and a determined dream may get your feet off the ground – but failing to incorporate newfound imperative components such as ESG standards could result in your company failing before it even gets off the ground.
ESG, otherwise known as environmental, social, and governance criteria – has made its name clear and here to stay, as many businesses around the world now seek to implement ESG practices into their business models.
Therefore, it’s crucial for companies to choose the right ESG framework for them in order for the business to maintain success – but can corporate leaders even begin to make this decision?
In this article, we’ll give a brief overview of ESG standards, why they are important, and how your company can pick the ESG framework most suited towards your individual goals.
ESG standards refer to the various guidelines used by companies, investors, and other stakeholders to determine how well a company is handling certain environmental, societal, and governance factors.
ESG standards are broken down into three categories:
ESG standards are most often used for the following reasons:
👉 Ultimately, ESG standards are beneficial for everyone involved in the organization.
ESG standards are becoming increasingly imperative for several reasons.
Here are just a few reasons why your company shouldn’t overlook the importance of ESG standards:
👉 In the end, ESG standards are crucial as they not only ensure a sustainable business for customers, investors, and the planet – but as it is slowly becoming compulsory to implement these protocols into any business model. ESG standards can help companies stay one step ahead while benefiting their stakeholders and growing their business at the same time.
If you’re having trouble getting started with choosing an ESG framework, here are a few of the most well-known ones that might help jumpstart the process for you.
The Global Reporting Initiative, or GRI for short, is an independent and global organization that aims to assist businesses around the world to take greater accountability and responsibility in terms of their environmental impacts.
Although using the GRI can prove effective for companies looking to improve their ESG standards, this framework can drain both time and resources from your business.
The Sustainability Accounting Standards Board, more commonly referred to as SASB – is another ESG framework. SASB was developed as a non-profit organization back in 2011 with its main goal being to help businesses on a global scale to disclose the sustainability topics most important to their investors.
SASB is a good choice if your primary concern with ESG standards is to keep your investors and stakeholders happy, but it may not have the broad-spectrum your company is looking for if you’re seeking to implement a more well-rounded ESG framework approach.
The Task Force on Climate-related Financial Disclosures, or the TCFD, is another ESG framework developed back in 2015 by the Financial Stability Board with a goal to ensure consistent climate-related financial risk disclosures.
However, the TCFD may not be the right framework for your company if your company isn’t ready for consistent challenges and improvements – as the TCFD has evolved to be more rigorous in recent years, even creating a counterpart called the TNFD.
The United Nations Sustainable Development Goals, better known as SDGs, are 17 various sustainability goals that companies can use as a guideline to create their own individual ESG goals.
👉 This framework could prove effective for companies that enjoy their autonomy and freedom to create their own ESG framework, but may not be the best when it comes to satisfying stakeholders and investors.
Choosing the right ESG framework for your company can be challenging, especially when you don’t have all of your goals and objectives in order beforehand.
In addition to this, many companies will try to choose an ESG framework when they don’t know where their company currently stands environmentally in terms of carbon emissions – but Greenly can help your company to understand where it's at and to curate a personalized reduction strategy.
Otherwise, once this preliminary and imperative step to understanding your company’s carbon footprint is done – here are a few factors to be considered when choosing an ESG framework:
👉 More often than not, it will be difficult to choose an ESG framework that perfectly fits all of these needs – so it’s important to narrow down your priorities and select your ESG framework accordingly.
Even if it seems overwhelming, it’s important to remember that it is more than possible to determine the right ESG framework for your business.
Here is a personalized checklist to keep handing when looking through your options for ESG frameworks:
Once you’ve chosen your ESG framework, your company will still have a challenge ahead of them – as implementation is required.
Here’s how your company can effectively incorporate your new ESG framework into your current business model:
👉 It is important to remain aware of the challenges that could arise when implementing ESG francework, such as seeking to avoid greenwashing, paying attention to both your short and long-term goals, and maintaining good communication between your stakeholders.
Overall, it is equally as imperative to choose the right ESG framework for your company as is the process to implement the ESG framework itself. As sustainability continues to take the world by storm, getting your ducks in a row when it comes to ESG and your ESG framework sooner than later has never been a better idea.
If reading this article on how to choose the right ESG framework for your company has made you interested in reducing your carbon emissions to further fight against climate change – Greenly can help you!
It can be difficult to determine which ESG framework will work best for your company and help you to achieve your climate goals, but don’t worry – Greenly is here to help! Click here to book a demo and get personalized expertise on how you can start to reduce your own emissions and decrease your environmental impact.
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