How do you compare and select the right ESG standards for your company?

As more and more companies are recognising the importance of environmental, social, and governance (ESG) issues, the need to select the right ESG standards for your company is becoming increasingly crucial. With the growing demand for transparency and accountability in the business world, companies are under pressure to demonstrate their commitment to ESG issues.

However, with so many different ESG standards to choose from, it can be overwhelming for companies to determine which standards align best with their goals and priorities. In this blog post, we will explore the process of comparing and selecting the right ESG standards for your company in depth. We will take a closer look at the different types of standards available, the factors to consider, such as industry and business model, and the importance of third-party verification. By understanding the different options available and the factors to consider, you can ensure that your company is making the best possible choices when it comes to ESG.

 

Understand the Different Types of ESG Standards

One of the first steps in selecting the right ESG standards for your company is to understand the different types of standards available. There are a number of different ESG standards, such as the International Sustainability Accounting Standards Board (SASB), and Global Reporting Initiative (GRI), each with their own unique focus and requirements. For example SASB focuses on financial materiality and GRI focuses on sustainability reporting. By familiarising yourself with the different types of standards available, you can better understand which ones align with your company’s specific goals and priorities.

It is important to note that different standards have different levels of rigor and complexity, and companies should consider their own resources and capabilities when choosing which standards to adopt. For example, a small company may not have the resources to comply with the more complex standards such as GRI, while a large multinational corporation may find it more beneficial to adopt a higher standard. Additionally, it’s worth to mention that these standards can be used in combination, and companies can choose to adopt more than one standard, depending on their specific needs.

 

Consider Your Industry and Business Model

Another important factor to consider when selecting the right ESG standards for your company is your industry and business model. Different industries have different ESG risks and opportunities, and it is important to select standards that are specific to your industry. For example, a company in the extractive industry may focus more on environmental standards, while a company in the retail industry may focus more on labor standards. By understanding the specific ESG risks and opportunities in your industry, you can select standards that address those issues and align with your company’s priorities.

In addition, different business models may also have different ESG considerations, so it is important to select standards that are appropriate for your company’s specific business model. For example, a company that operates primarily in emerging markets may have different ESG risks and opportunities than a company that operates primarily in developed markets.

By understanding your company’s specific business model, you can select standards that align with your company’s unique ESG risks and opportunities. It is important to conduct a thorough analysis of the company’s operations and identify the specific areas where the company has the most impact, and then choose the standards that align best with those areas.

 

Look for Third-Party Verification

When selecting the right ESG standards for your company, it is important to look for third-party verification. Third-party verification also helps to ensure that your company is meeting the requirements of the chosen ESG standards.

There are a number of organisations that offer third-party verification services, such as the Carbon Trust, DNV GL, and Bureau Veritas. These organisations have the expertise and experience to provide a thorough and objective assessment of your company’s ESG performance. By choosing a reputable third-party verifier, you can ensure that your company’s ESG performance is credible and trustworthy. Furthermore, by choosing a third-party verifier that is accredited by a recognised body, such as the Climate Bonds, you can be assured that the verifier has met rigorous standards for quality and impartiality.

Third-party verification can also provide valuable insights into areas where your company can improve its ESG performance. The verifier will assess your company’s operations and identify areas where it can improve. This can be particularly valuable for small and medium-sized companies that may not have the resources or expertise to conduct a thorough assessment.

In addition, many investors, customers, and other stakeholders are increasingly looking for third-party verified ESG information when making investment or purchasing decisions. By obtaining third-party verification, companies can demonstrate their commitment to ESG issues and differentiate themselves from their competitors. It can be a powerful marketing tool that can help to attract and retain customers, and can also increase the company’s brand value.

 

In conclusion, selecting the right ESG standards for your company is a crucial process that requires a thorough understanding of the different types of standards available, consideration of your industry and business model, and a commitment to third-party verification. By understanding the different options available and the factors to consider, companies can ensure that they are making the best possible choices when it comes to ESG.

It is important to remember that ESG is a constantly evolving field, and companies should regularly review and update their standards to ensure that they are keeping up with the latest developments and best practices. By keeping in mind the industry and business model, and seeking third-party verification, companies can ensure that they are making informed decisions on their ESG standards.

Companies should also consider the growing demand for transparency and accountability in the business world, and the pressure to demonstrate their commitment to ESG issues. Selecting the right ESG standards means companies can demonstrate their commitment to ESG and differentiate themselves from their competitors, attract and retain customers, increase the company’s brand value, and ultimately contribute to the overall sustainability of the business.