Many larger corporations have made a switch to an ESG (Environment, Social, and Governance) program for the reporting financial performance from their organizational sustainability program.  This is different than the ESG used by ESG ratings and data products providers (e.g MSCI, S&P Global, ISS). These companies provide company ratings that they compiled for the capital markets.

However, they often only report using AA, A, BBB, BB, B, etc. This information will lead you to many stories but can disappoint you with respect to a specific corporation, a division, or a full supply chain for that organization.

For a corporation or its various units and divisions, I use the planning methodology of the International Organization for Standardization (ISO).

• The E stands for environmental efforts (ISO 14001) and energy (ISO 50001)
• The S stands for social responsibility as measured by (ISO 26000 and ISO 45001)
• The G stands for governance and compliance as measured by (ISO 37000 and ISO 37301).

We are only going to look at Sections 4 (context) and 6 (planning) for each of these six standards. We are not setting up a management system.

ESG Context

The context represents the following information:

• Understanding the organization and its context
• Understanding the needs and expectations of the stakeholders
• Determining the scope of each of the six ESG programs above
• Creating an environment, social, and governance program.

These program elements create actions to address organizational risk (opportunities and threats). The organization shall determine internal and external issues that are relevant to its purpose and that affect its ability to achieve its ESG objective The organization also determines the needs and expectations of the stakeholders, including the shareholders.

ESG Aspects

Within the defined scope of each of the six ISO/ESG program areas listed above, the organization shall determine the aspects of its activities, products, and services that it can control and those that it can influence to create ESG impacts considering the life-cycle perspective. The organization then looks at the significant aspects that can result in ESG risk  (opportunities and threats).

ESG Objectives and Planning to Achieve Them

The organization shall establish ESG objectives at relevant functions and levels, considering the organization’s significant ESG aspects and considering its risk (opportunities and threats).

When planning how to achieve the ESG objectives and planning to achieve them.  The organization shall consider how actions to achieve its ESG objectives can be integrated into the organization’s business processes.  This process consists of:

• Aspects and impacts
• Significant aspects
• Objectives
• ESG program objectives.

While the ESG numbers are different from company to company, they are all gathering the information that will be used to follow to be successful with their own organization(s)!

BIO

Robert B. Pojasek, Ph.D. is the Managing Director of the Center for Corporate Performance & Sustainability.  He consults to companies seeking to upscale their sustainability programs (at the Corporate level, operating facilities and supply chain) using the ISO “high-level structure”  and the ISO 9004 concept of ““Sustained Success.” Dr. Pojasek has been teaching organizational sustainability online at Harvard University for the past 18 years. He has written two textbooks on this topic: “Organizational Risk Management and Sustainability: A Practical Step-by-Step Guide”  and “How New Risk Management Helps Leaders Master Uncertainty.”  The Center’s staff is completing a book on “Mastering the Alphabet Soup of Sustainable Development: A leadership Guide.”  You can learn more about the Center’s activity on its LinkedIn website: https://lnkd.in/etuG7t4