ESG means environmental, social, and governance. It is an integral part of a company’s sustainability journey. It requires developing a set of practices, including policies, goals, procedures, and metrics to mitigate risks, improve the environment, create a positive impact on society, and bring transparency to governance bodies.
In recent years, investors focused more on ESG criteria and developed strict guidelines to optimize investment decisions. As a result, more companies have started implementing ESG into their business strategies and operations.
Many businesses hire ESG consultants to streamline processes, such as ESG screening, company interaction, and report preparation. Organizations that focus on ESG reporting need an ESG department/team or consultant.
A consultant has years of experience and extensive knowledge of ESG processes and tools, allowing them to evaluate how well your company is performing, your ESG level of risk, and how you can streamline your business operations with ESG compliance. Read on!
What is The Role of an ESG Consultant?
An ESG consultant helps your company understand your business’s environmental, social, and governance aspects. The purpose is to work toward the end goal and improve your business’s bottom line. Besides, an ESG consultant uses evidence-based knowledge and real-time data analytics to analyze disclosures and share profit and loss information.
Generally, ESG disclosures must stand up to a thorough auditing process with identifiable sources, tracking, and defined key performance indicators or metrics. Hiring an ESG consultant offers various benefits to your company because the professional with years of experience can:
Clarify and develop your company’s ESG vision, mission, and priorities
Determine stakeholders’ expectations and motivations during fundraising
Develop a transparent ESG policy or strategy and implement a solid framework
Establish and implement a reliable ESG plan that aligns with your company’s short-term and long-term goals
Define key performance indicators for your company to measure the ESG performance and streamline your business operations
Perform and analyze risk assessments, identify industry trends, and provide training to your company’s ESG department or team
Why Do You Want To Work For ESG?
ESG is a valuation method that considers environmental, social and governance problems. For instance, ESG in business is a set of requirements or criteria used to assess a company’s operations, practices, and risks.
Developing an ESG framework is crucial for achieving sustainability, attracting investors, and determining whether your company aligns with its values. It also helps you analyze your company’s purpose, value, and worth.
Natural Resource use
Environmental, social, and governance risks are similar to other business problems. Therefore, you must understand, identify, analyze, quantify, and manage these risks. The reason is that some ESG risks can cause unpredictable complications and take a massive toll on your business.
For example, today, the world is uncharted territory regarding global warming and climate change. The problem is that businesses do not have historical data to analyze environmental aspects. That’s why investors focus on ESG criteria in their investment decisions.
Bear in mind that ESG risks are extremely expensive and cost your company a lot of money. For example, climate change and global warming costs can lead to billions of dollars for each disaster.
Although the adaptation and mitigation costs are high, the costs of uninsured losses are way more than the cost of proactive reduction or mitigation mechanisms. Common examples of ESG risk management are assessing:
Climate change risks
Human rights problems
Hiring an ESG consultant is an excellent way to streamline ESG risk management and support sustainable, reliable, efficient, and long-term business growth by proactively assessing potential problems.
An ESG consultant performs data analysis to identify potential risks, allowing your company more time to adapt and develop sustainable strategies and cost-reduction methodologies.
How Do I Prepare for ESG?
Investors evaluate businesses based on environmental, social, and governance metrics. As stated earlier, ESG is a set of standards or practices for a business’s operations that let investors make strategic, informed, and socially conscious decisions about where to invest money.
In addition, numerous investors focus on ESG factors when performing their investment evaluation and financial analysis. Climate risks, data security, privacy, regulatory pressures, and demographic shifts are global challenges that force investors and companies to take an interest in ESG. We recommend the following aspects/factors to prepare for ESG.
Choose a Framework
Selecting the proper framework or strategy for your company is the first step to preparing for and meeting ESG requirements. Based on your company’s location, you can choose a framework that best fits your needs.
For example, if you have a company in the United States or Canada, you can go for GRI, the most popular and efficient ESG reporting framework. On the other hand, if you operate your business in Europe, you can choose the EFRAG framework because it has gained substantial traction in Europe.
Get Support From the Board of Directors
In addition to choosing the correct ESG framework for your company, you must seek support from the board of directors. Governance must guide a business’s ESG strategy, develop accountability measures, and streamline processes for implementation.
If you are serious about incorporating ESG into your business strategy, you must seek input and oversight from the leadership. A consultant can help you prepare a comprehensive report to get proper support from the board of directors regarding strategy, opportunities, and risk management.
Create an ESG Committee
Creating an ESG committee is an excellent way to develop and implement strategies that streamline your company’s overall bottom line. However, you must set up a cross-functional ESG committee to ensure transparency and monitor the progress related to environmental, social, and governance metrics.
We recommend including executives in the committee to represent each category. These include people from the finance department, human resources, IT, legal, and administration.
The committee will set up and assess ESG-related requirements, mechanisms, and processes throughout the company. You can also hire an experienced ESG consultant to provide the committee with valuable and data-driven insights, allowing the members to communicate goals and progress to investors, employees, and other key stakeholders.
The consultant will establish success criteria and implement methods to help you track the overall progress. Besides, the consultant can develop processes, design control, and enforce compliance-related procedures to add value to your company.
Collect, Analyze, and Communicate Data
A consultant can help you determine methods used to track metrics and risk areas. You must document activity in all areas, including initial assessment, current status, and recommended remediation strategies.
A consultant uses evidence-based methods to design, document, and test metrics to ensure accuracy, efficiency, and reliability in various ESG-related functions. Once you have implemented the initial program, you audit it and certify the data collection processes to ensure accuracy and reliability in outcomes.
A consultant can collect and consolidate the ESG information your company discloses to reduce costs and optimize operations. After confirming the data collection and outcomes, you must communicate the results/outcomes to the external audience, third parties, and key stakeholders.
You can leverage a consultant’s expertise and collaborate with the ESG committee to communicate goals and progress to external and internal audiences.
The ESG information a company discloses should be collected and consolidated with the same diligence as financial information. Remember, an ESG consultant can play a crucial role in ensuring everything goes smoothly.
3 Characteristics that Make for a Great ESG Consultant
According to the Boston Consulting Group, 80% of businesses in various industries invest in ESG and sustainability, and over 60% prioritize environmental, social, and governance-related factors in their initiatives.
However, this shift in focus on ESG and sustainability comes with numerous challenges that can take a massive toll on your finances. However, when you hire an ESG consultant, you can reduce risks and streamline the overall process. Here are the three primary characteristics or qualities to look for in an ESG consultant.
Program Development Skills
An ESG consultant offers numerous services and uses evidence-based knowledge, tools, and resources to implement the best practices, allowing your company to develop an effective, accurate, and result-driven ESG program.
Besides, an ESG consultant analyzes your organization to determine its current environmental, social, and governance strengths, weaknesses, and maturity levels. So, hiring an ESG consultant with program development skills is essential.
You can leverage a consultant’s broad knowledge of various ESG topics and gain insights into creating value for your company. A consultant also supports developing strategic ESG programs with targeted environmental, social, and governance management.
Supply Chains Auditing
Supply chain audits are critical for companies to reduce costs and improve business management. However, not focusing on and aligning ESG with supply chains can lead to complications and increased costs.
On the other hand, when you hire an ESG consultant, you can develop a structured program for the existing sustainability risk management and establish protection protocols to mitigate the supply chain risk.
Moreover, hiring an ESG consultant with supply chain auditing skills can help you identify material risks and solve other issues, including:
Occupational health and safety
Child labor problems
A consultant with solid knowledge of ESG reporting can relevant processes can improve your environmental credentials. You can leverage a consultant’s cutting-edge tools and evidence-based data/information to create actional programs and provide directional guidelines in various business processes, including supply chains. The purpose is to boost sustainability, reliability, accuracy, and profitability.
A professional consultant with years of experience can identify and analyze the correct data and use an advanced software application to digitize all processes. Moreover, a consultant uses the software to automate numerous processes and transform real-time data into easy-to-understand graphs and information.
How Can an ESG Consultant Reduce the Cost of Operations?
An effective ESG program developed and supported by an experienced consultant can determine cost-saving opportunities for your company. These include energy efficiency retrofits, safety programs to reduce employee burnout and downtime, and long-term contracts for safe and renewable energy procurement.
Because companies in the 21st century focus on improving their supply chain operations, they must concentrate on eco-friendly assets and reduce carbon footprints. A consultant can help you develop a program for energy efficiency through power purchase agreements (PPAs).
The primary goal is to stabilize and streamline your company’s cash flow and reduce predictability errors. A consultant can also help you upgrade legacy equipment and install efficient alternatives, reducing energy consumption, workplace accidents, and employee downtime.
Moreover, consultants use evidence-based knowledge and tailor the strategy based on your company to streamline business transformation. As a result, you can divest harmful assets and invest in safe, renewable, and eco-friendly technologies.
Moreover, ESG consultants can reduce costs significantly while optimizing your business operations and making them more sustainable. Not only does this increase trust among employees, stakeholders, and clients, but it also reduces the overall costs of operations.
Executing ESG efficiency can reduce operating expenses, including raw materials costs and the cost of carbon and water. A consultant can help you implement a reliable ESG program, allowing you to track key metrics, such as:
Waste treatment costs
Raw material usage
Tracking is an integral part of your ESG program because it helps you improve efficiency, reduces costs associated with water and energy usage and waste transport, and enhances cost management, leading to:
Better risk management
Less exposure to legal penalties
And improved innovations
How Can ESG Experts/Consultants Enrich Your Business Strategy?
An ESG consultant can enrich your business strategy through evidence-based practices and proven/tried/tested tools. The primary objective of hiring an ESG consultant with years of experience is to streamline an ESG program, align it with your business strategy, and create actionable plans.
It reduces operational costs, saves time, and improves efficiency. Most businesses, particularly in the supply chain industry, believe that a consultant is an unnecessary expense. However, this is a misconception. Companies hire consultants to recoup costs, reduce operational costs, and improve business processes.
To enhance your business value through your ESG program, you must develop a proper roadmap customized to your company’s specific requirements. An ESG consultant can help you understand your status cost.
Likewise, the professional can set the baseline by evaluating your current ESG initiative and set priorities through a materiality assessment. You can also identify gaps in performance and solve problems quickly, allowing your business to stand out from the competition.
Bear in mind that a transparent and clear roadmap requires proper execution. With the support and guidance from your ESG consultant, you can develop specific measures and processes and operationalize your environmental, social, and governance-related strategies. A consultant can:
Streamline data collection for the ESG indicators and measure the baseline values
Identify and implement data collection tools to optimize processing, performance management, analytics, and reporting
Integrate ESG requirements into your company’s existing processes and develop guidelines to support the accurate, efficient, reliable, and risk-free implementation of the program
An ESG consultant allows companies to develop a framework for evaluating progress toward reaching environmental, social, and governance goals. You can leverage quantitative information to measure your business value.
When Should You Contact an ESG Manager/Expert for Your Company?
Because new risks, rules, regulations, and conditions take over the market, companies must hire ESG consultancy services to make informed decisions.
So, if you want to drive performance, reduce risks, generate higher ROIs, improve credibility, build reputation, and ensure transparency, hiring an ESG consultant is a must. You can contact an ESG manager or expert for your company when:
Your Company is Not Sustainable
Because ESG consultants have years of experience and hands-on experience, they can help companies improve their ESG credentials. Whether you run a supply chain company, a manufacturing business, or a retail brand, a consultant can provide a wealth of knowledge and create actionable strategies to achieve sustainability.
A consultant harnesses the power of real-time data and cutting-edge tools, including software based on artificial intelligence and machine learning algorithms, to develop strategic plans and provide your business with directional guidance to ensure efficiency and profitability while meeting sustainability criteria.
You Don’t Have a Team to Implement ESG Strategy
Although most businesses think that achieving a more environmentally friendly business is simple, this is a misconception. The reason is that most companies experience various challenges and lack the resources to implement ESG strategies.
In addition, you must create a team of qualified professionals to deal with the complexities and nuances of your operational business. However, this requires massive investments.
The good news is that you can contact an ESG Manager or consultant to streamline the process without high costs. A consultant offers affordable services, from onsite ESG training to integrating new software applications, allowing you to manage supply chain data and ensure everyone understands the changes/impacts.
Setting goals and dreaming of a more environmentally friendly business is one thing. Still, it’s another thing to implement the steps necessary and execute this vision within the complexities and nuances of an operational business.
You Don’t Have Data Visualization Tools
Data plays a crucial role in generating valuable insights and making informed decisions. However, most businesses do not have visualization tools to convert raw data into meaningful information.
Quality data is crucial for your company, allowing you to glean conclusions from it. Transforming raw data into a simple to understand graphs and reports is critical to achieving stakeholder engagement and streamlining operations.
An ESG consultant has access to cutting-edge data visualization tools to bring raw data to life and communicate it efficiently and reliably so everyone can understand it. Turning raw data into meaningful information can help your company achieve sustainability and meet ESG goals.
Businesses focused on ESG requirements, opportunities, and sustainability goals perform better than other companies. For instance, your company with an ESG strategy is better prepared for environmental changes, societal problems, and governance issues.
Hiring an ESG consultant can optimize your strategy and create actionable plans through cutting-edge tools based on predictive analytics, mathematical modeling, artificial intelligence, and machine learning algorithms. Contact us today for more information.
By Shantala Hickey, ESG, Sustainability Supply Chain Manager
Shantala joined GPSI’s team in 2022, following her post-graduate diploma in Environmental Management. She is responsible for the ESG Division and the corporate social responsibility strategy. Before joining GPSI, she held several management positions at Bombardier Aerospace as well as Galderma, a company operating in the pharmaceutical and cosmetics industry. She has more than 15 years of experience in procurement, logistic, and production planning. The environment and sustainable development are undoubtedly her greatest passions.
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