Please reach us at nat@natcapco.com.au if you cannot find an answer to your question.
ESG stands for Environmental, Social, and Governance.
It refers to the framework designed to be integrated into a company's strategy in order to create enterprise value by expanding the company’s objectives to include the identification, assessment and management of sustainability-related risks and opportunities.
The environmental aspect of ESG focuses on preserving the natural world. It includes topics such as climate change, greenhouse gas emissions, biodiversity loss, deforestation, pollution, energy efficiency and water management.
The social aspect of ESG focuses on people and relationships. This includes working to support gender and diversity, equity, and inclusion movements.
The governance aspect of ESG focuses on how the business is run. This includes the structure of the board and management of the company, the decision-making processes, policies and guidelines it implements and follows, as well as the checks and balances it has in place like auditing and compliance.
Any company, big or small, family or corporate, in any sector or industry, can benefit from using ESG.
There are a number of benefits to integrating ESG into your company's strategy.
Some key advantages include:
- Creation of enterprise value: By expanding company’s objectives to include sustainability-related risks and opportunities, a company can create value by mitigating potential negative impacts and capitalizing on positive opportunities.
- Improved risk management: Sustainability risks and opportunities can impact any part of a company - from environmental liabilities to employee health and safety concerns. Integrating ESG into risk management processes can help identify these threats early and manage them effectively.
- Attracting/retaining top talent: A growing number of employees want their employers to be socially responsible - they see it as a key factor in job satisfaction and career development potential. Offering sustainable practices not only helps attract top talent but also helps keep them engaged long term.
- Building brand trust: Customers are increasingly looking for brands that share their values when it comes to sustainability. Offering sustainable practices can help build trust between a company and its customers.
- Cost savings: Many sustainable initiatives can also lead to cost savings through increased efficiency or reduced waste disposal costs.
ESG can improve a company's reputation by demonstrating its commitment to sustainable practices that are important to customers, investors, and other stakeholders. Additionally, implementing ESG policies can help a company avoid or mitigate negative environmental or social impacts that could damage its reputation.
Integrating ESG into business strategy creates value for a company by expanding the company’s objectives to include the identification, assessment and management of sustainability-related risks and opportunities in respect to all company’s stakeholders (including but not limited to customers, suppliers and employees) and the environment. Additionally, implementing ESG policies can help a company avoid or mitigate negative environmental or social impacts that could reduce its profits or create liabilities.
ESG reporting financially impacts a business by helping identify and assess sustainability-related risks and opportunities. This can help companies make better-informed strategic decisions that may lead to increased enterprise value. Additionally, ESG reporting can help companies build trust with their various stakeholders by demonstrating their commitment to responsible and sustainable business practices.
Implementing an effective ESG Strategy can contribute to reductions in business expenses in a multitute of ways. Just a few examples are:
- reducing the costs associated with reduced energy and water consumption and waste output.
- reducing the costs associated with onboarding and training new staff as a result of staff turnover.
There are a few reasons why companies may choose to do ESG reporting, even if it is not compulsory in Australia.
Firstly, ESG reporting can help companies identify and assess sustainability-related risks and opportunities. By understanding these risks and opportunities, companies can make better business decisions that take into account the impact on all stakeholders, not just shareholders.
Secondly, ESG reporting can help companies improve their sustainability performance. Tracking and reporting on environmental, social, and corporate governance indicators can help companies identify areas where they need to make improvements and set goals to work towards.
Finally, ESG reporting can help companies build trust with those they do work with. Reporting on a company’s sustainability performance allows stakeholders to see how the company is performing and understand how it is addressing environmental and social issues.
There are many ways to improve ESG performance. Some of the most common methods include:
- Implementing strong environmental policies and practices – This includes things like reducing greenhouse gas emissions, conserving water resources, and recycling/reusing materials.
- Supporting social initiatives – Companies can support initiatives that promote gender equality, diversity, and inclusion, as well as poverty relief and community development.
- Investing in sustainable technologies – Technologies that are more environmentally friendly and socially responsible tend to be more sustainable in the long run. Companies can invest in these technologies to improve their ESG performance.
ESG is different from CSR in that it focuses on the identification and assessment of risks and opportunities related to sustainability, while CSR is more focused on philanthropy or charitable activities.
The most appropriate ESG framework for a company will vary depending on the company's size, sector, and location. Some common ESG frameworks include the Word Economic Forum Stakeholder Capitalism Metrics (SCM), Global Reporting Initiative (GRI), the UN Sustainable Development Goals (SDGs), and the ISO 26000 Standard on Social Responsibility. Natural Capital Co can help you to decide which framework will meet your needs.
Compliance-based frameworks require companies to meet specific standards or regulations with regards to environmental or social responsibility. Performance-based frameworks are voluntary and allow companies to decide which issues they would like to address based on their own priorities.
The most appropriate ESG framework for a company will vary depending on the company's size, sector, and location. Some common ESG frameworks include the Word Economic Forum Stakeholder Capitalism Metrics (SCM), Global Reporting Initiative (GRI), the UN Sustainable Development Goals (SDGs), and the ISO 26000 Standard on Social Responsibility. Natural Capital Co can help you to decide which framework will meet your needs.
There is no one answer to this question - each company will have its own set of priorities when it comes to sustainability. There are a number of resources available to Natural Capital Co that can help assess your company's performance in terms of ESG.
No, you do not need a university degree in sustainability in order to integrate ESG into your company's strategy, however it can be beneficial to consult with experts like Natural Capital Co who have experience in this area and can help guide you through the process.
Natural Capital Co have a simple and transparent approach to running ESG Projects.
We believe ESG is a journey to particular destination. This is why we separate our ESG Project into two intial phases – The Journey & The Destination.
ESG Journey
ESG Destination
For more information on how to get started with NCC, visit the GETTING STARTED page
Once we have all the required information it actually doesn’t take very long at all. The most time-consuming part of any ESG Project is the data extraction.
Natural Capital Co know exactly how to help you, no matter what your starting point is. We can help you with the data extraction for the required information needed for carbon footprinting, as well as with the development of the structures and policies that will be most suited to your company. We identify your needs and budgets in the preliminary phase so there are no surprises down the track.
Emissions deemed to be gases or particles that are put into the air as a result of activities conducted. They have been shown to have both environmental and social impacts.
Scope 1 emissions are direct emissions from sources owned or controlled by the company (e.g. smokestack from company).
Scope 2 emissions are indirect emissions from purchased energy sources (e.g., electricity used by the company).
Scope 3 emissions are all other indirect emissions not included in Scope 1 or Scope 2 (e.g., waste produced by a factory).
No, not all emissions are Scope 1, 2 or 3 emissions - these refer specifically to the classification system developed by the International Company for Standardization (ISO).
Your company emissions are recorded in the E-Environmental section of the ESG.
Yes. We offer to a number of different solutions based on your needs.
It depends on how complex your business is. We will first need to complete a baseline so we know where we are starting your ESG Journey from. In this preliminary phase we will identify your reporting requirements.
After baselining is completed, and depending on the complexity of your business, we find emissions accounting is most commonly done on a quarterly basis (seasonally) and compiling an ESG report is usually done either quarterly or annually, depending on stakeholder or shareholder requirements.
In the preliminary phase of the ESG Project Natural Capital Co will get an understanding of your project requirement and will suggest the frequency of visits base on your project and company needs. If it is your preference, Natural Capital Co are able to set up systems which will limit the number of visits required per ESG project.
Natural Capital Co has developed a workshop program which assists C-Suite executives, board members and business owners to implement their own ESG strategies, and reporting frameworks. Due to mandatory reporting requirements due to start in July 2024, it is pertinent to learn and lead in the ESG space to maintain market access, company position in supply chains and comply with financial and investor requirements. Please contact Natalie for further information.
Copyright © 2024 Natural Capital Co. Pty Ltd. - All Rights Reserved.