There are lots of ESG standards out there, so why did we create our own?

There are many good global sustainability standards out there for assessing and reporting on environmental, social and governance (ESG) activities. The purpose of these standards - and all standards, really - is to provide a consistent approach. To be able to evaluate an organisations activities and provide a meaningful outcome to stakeholders because it’s tied to a consistent, established  basis of assessment and reporting format.

Some of the leading standards for ESG include Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), and Carbon Disclosure Project (CDP). Each of these standards were developed in the context of the times; ESG Reporting has been something performed typically by the top 1% of global enterprise. It’s been driven by financial markets with ESG investors and the general public having influence over the ESG reporting. ESG drives those investment decisions and allows the public to apply pressure to large organisations. ESG has been broadly seen as a risk and opportunity for large companies as the world moves to reduce carbon emissions and improve impacts on society and the environment generally; with increasing regulation, shifting consumer expectations, and increased business risks from weather events, as examples. 

In that context, the standards have been developed to suit that purpose. GRI has gone the furthest in trying to democratise the standards to enable reporting for companies outside that top 1%. But many of the core concepts, the structure of the standard, and the reporting requirements are still tied to the context above. That means, it’s still quite inaccessible for many businesses. It creates a burden for running a formal ESG program and complying with rigorous reporting requirements. That relies on GRI experts, often significant consulting work or an internal team to manage it, and therefore incurs costs that many businesses can’t justify when it’s optional. 

It’s important to have a standard that works for the many other businesses that fundamentally look at ESG in a different way to the above context. That is, ESG is about purpose, progressive values, giving back, doing good, and aligning company activities to the expectations of stakeholders. Those expectations can create commercial value from the affinity of those stakeholders to want to work with the organisation. Those stakeholders include employees, investors, customers, partners, communities, employee candidates, and other beneficiaries. 

To address this need, we create our own reporting criteria and framework. This is not intended to replace any other ESG standards and can work as a pathway to those standards. But importantly, by providing a simple set of criteria that any stakeholder can understand, flexibility around how that criteria can be achieved, and not setting a minimum bar to be able to issue a report, it allows any business to start their ESG reporting journey. 

Our pilot customers have noted that it’s interesting to see how many of their standard business practices translate into ESG activities that have a positive environmental and social impact. In this approach they’re able to highlight those activities to stakeholders, and have a means for understanding and improving other things they can be doing for greater impact. And in practice issuing a report demonstrates a commitment that positively differentiates the company.

The topics covered includes: 

• Purpose: How do you align your objectives and business activities, to support both profit and purpose? 
  
• Employee Wellness: How do you support your team welfare and provide a rewarding and fulfilling workplace?
  
• Diversity, Equity & Inclusion: How do you promote diversity of individuals and perspectives, and inspire connection, inclusiveness and fairness?
  
• Community Impact: How do your business activities flow through to broader impacts on society? What do you do to give back? 
  
• Environmental Impact: How do you support and advocate for behaviours and activities that reduce your environmental footprint in the context of your business goals? 
  

The Criteria

We use the below criteria because it works for any company. It has the flexibility to adapt to any circumstances and to include a broad range activities against those criteria that stakeholders may care about, while tying it to criteria so that it’s meaningful.

The criteria included in CC1-5 is directly from the AICPA SOC 2 standard - because that criteria has been established from consolidating global thought leadership across different standards, into a core set of control environment, or governance principles. That is, what are the basic structures and activities that support effective company management, company success, and achieving the companies purpose (whatever that is). We then build on that with the ESG specific activities and elements of general company governance with specific criteria for social, environmental and specific ESG governance criteria.