Insights / February 20th, 2022

ESG Strategy – What is it and why might you need one?

Developments in ESG

ESG is quickly becoming a primary concern for businesses of all sizes due to increasing consumer expectations and subsequent regulatory requirements. As a result, many organisations are being asked to demonstrate their ESG compliance as part of ongoing reporting obligations and business-to-business transactions. While these obligations are primarily directed towards large businesses, often smaller businesses are captured within the process as part of supply chains and subcontracting arrangements.

To prepare for ESG reporting and demonstrate commitment to meeting ESG expectations, all organisations should establish a proactive ESG strategy.

What is an ESG Strategy?

In broad terms, an ESG strategy is an organisation’s plan for incorporating ESG factors into its operations with a view to creating long-term value. An ESG strategy should detail the organisation’s approach to ESG and a comprehensive framework for developing a position.

An effective strategy will set out specific ESG initiatives and objectives that the organisation intends to implement and a detailed plan for doing so. Importantly, it is necessary for an organisation to consider what elements under the umbrella of ESG are material to that organisation. For example, objectives around supply chain transparency may be more relevant for an organisation operating in apparel compared to a professional services organisation.

Once an effective ESG strategy has been established, organisations can reference relevant aspects when demonstrating compliance as part of their ESG reporting obligations.

Metrics and Review

After implementing an ESG strategy, organisations should regularly review their performance against key ESG metrics. This could involve, for example, assessing the organisation’s carbon footprint, employee health & safety, or diversity in governance. Regular comparison to key ESG metrics will enable the organisation to identify areas for development within their ESG strategy. An ESG strategy can also be reviewed against ESG frameworks such as the United Nation’s Sustainable Development Goals to determine the extent that it incorporates global ESG initiatives. By implementing regular review mechanisms, organisations can continue to demonstrate a dynamic and future-driven approach to ESG compliance.

We’re here to help

Developing an effective ESG strategy requires a detailed understanding of ESG principles and industry specific initiatives. At Cowell Clarke, we have a team of specialist ESG advisors who can assist with formulating a tailored ESG strategy for your organisation. In addition to initial implementation, we also provide ongoing assistance to refine your ESG strategy as your organisation and ESG framework grows.

Please don’t hesitate to contact us or click here for more information about how we can help future proof your organisation.

This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.