The Ultimate Guide to ESG Sustainability
The Ultimate Guide to ESG Sustainability...

The Ultimate Guide to ESG Sustainability

This page is regularly updated for accuracy & comprehensiveness
Last update: September 28, 2022

Julie Yamamoto ESG Content Marketing Manager, OneTrust

clock33 Min Read

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Trust is becoming an essential differentiator. A range of stakeholders, including investors, governments, customers, and employees, are demanding more from businesses. It’s no longer solely about driving profits for the benefit of shareholders. It’s about pursuing higher goals that positively impact society and living up to those stated values. Modern leadership requires being trusted not only with today, but also with our shared future. To lay the groundwork, organizations must demonstrate their commitment to the three pillars of a responsible business: environmental, social, and governance (ESG).

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The global pandemic accelerated the pace of digital change and created societal shifts that continue to alter how we work, play, learn, and shop. Constantly connected Generations Y and Z have grown up, unafraid to speak their minds, and act for justice. As the most trusted institution, businesses are now expected to lead the charge in tackling global issues such as climate change, diversity and inclusion, racial injustice, and more. Stakeholders demand that corporate responsibility be integrated, connected, and transparent throughout the business.

In the face of these shifts, companies that demonstrate their commitment and progress regularly and transparently are building stronger foundations of trust. And while the ESG reporting landscape is still changing rapidly, a convergence between major frameworks and standards is already underway. Understanding and being primed to align with these shifts is essential to any organization aspiring to build market credibility and trust leadership.

Now is the time to embed ESG into the DNA of your organization. Doing so will not only foster stakeholder trust, it will differentiate you from competitors, and position you better to address new ESG risks and opportunities as they surface.

This guide will equip you with the foundational know-how you need to understand, navigate, and establish a successful ESG program to build trust within this rapidly changing landscape.

What is Sustainability and ESG?

People often assume sustainability is limited to environmental issues, but it is fundamentally interconnected with economic and societal drivers. For example, the human activity associated with economic growth has accelerated climate change, while the climate crisis disproportionately affects women and other marginalized groups.

The most widely quoted definition of sustainability is in the 1987 Brundtland Commission Report: “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” At its most basic level, it means meeting all people’s needs equitably and fairly while operating within the limits of the world’s resources and ecosystems. This is how we will preserve sufficient resources for the generations to come.

Emergence of the Triple Bottom Line

In 1994, British management consultant John Elkington applied this concept to business by adding “people” and “planet” to the traditional bottom line of “profit.” This triple bottom line (TBL) was intended to strengthen corporate alignment to and transparency around the true cost of doing business. As this idea took hold, stakeholders began more aggressively advocating for the need for greater corporate transparency and accountability across the TBL. Business leaders started paying attention.

Rise of Stakeholder Capitalism

In 2020, at the annual meeting of the World Economic Forum (WEF), 120 of the world’s largest companies came together to support the development of a common set of ESG disclosure standards and metrics for their stakeholders. These “Stakeholder Capitalism Metrics” stood in stark contrast to the traditional tenets of shareholder capitalism, in which companies operate to increase profits and return the highest possible dividends to shareholders.

Stakeholder capitalism is “a form of capitalism in which companies do not only optimize short-term profits for shareholders, but seek long term value creation, by taking into account the needs of all their stakeholders, and society at large.”
WEF

ESG as the Foundation of Responsible Business

Over time, the definition of sustainability evolved to include three main pillars: Environmental, Social, and Governance (ESG), which today are considered the foundation of a sustainable business. These are the metrics organizations typically report on to their stakeholders. Companies must also take into consideration how ESG-related risks can impact value creation. For example, environmental concerns such as climate change, deforestation, and water security and availability, can limit the ability to conduct business as usual.

  • The Environmental pillar focuses on how a company safeguards the environment, e.g., how its policies address climate change and carbon emissions, pollution and waste, deforestation, energy efficiency, and electronic waste. It also considers how environmental risks and opportunities are addressed.
  • The Social pillar focuses on how a company manages relationships with its employees, suppliers, customers, and the communities where it operates. Social also addresses corporate policies surrounding human rights, health and safety, data protection and privacy, and gender and diversity. It considers how social risks and opportunities are addressed.
  • The Governance pillar focuses on a company’s leadership, executive pay, audit committee structure, board diversity, tax transparency, corruption and instability, lobbying and shareholder rights. It considers how internal controls for decision-making and business operations are structured.

ESG Examples Chart

Broadening Stakeholder Impact

These foundational ESG topics, or metrics, are very important to investors as they represent inherent risk and opportunity for long-term value creation. Several studies have pointed to a tangible link between ESG and financial performance, with 81% of sustainable indices outperforming their peer benchmarks. Investors consider ESG factors – and their associated metrics and benchmarks – to be non-financial performance indicators for future valuation.

Originally a way for investors to better screen their investments for ethical and sustainable companies (and the associated higher performance), the ESG model is now being used by a wide range of stakeholders and regulatory authorities across the globe. Executive teams and boards across every industry are recognizing that people want to invest in, work with, and be employed by brands that treat sustainability as a key part of their overall business strategy. And they are making ESG a top leadership agenda item because of it.

A recent IBM survey of 3,000 CEOs worldwide found that sustainability is now one of the top five important issues for CEOs, compared to being in last place in 2015. It’s no longer enough to focus inwardly on revenue and costs alone, and smart business leaders know that. In fact, eight out of ten CEOs said sustainability investments will drive better business results in the next five years.

What Other Ideas are Shaping the Sustainability Conversation?

As ESG has become a more meaningful part of how companies assess, track, and report their progress, a host of related ideas can shape sustainability-focused conversations. Understanding the following definitions will help your organization successfully understand and navigate the nuances.

Corporate Sustainability vs. Corporate Social Responsibility

  • Corporate sustainability is focused on value. It refers to how a company incorporates material ESG risks and opportunities into its business strategy for value creation. The primary audiences for corporate sustainability tend to be investors, regulators, lenders, insurers, customers, partners, and rating providers.
  • Corporate social responsibility (CSR), sometimes referred to as corporate citizenship, is focused on values. It refers to programs or actions that a company takes to advance and integrate positive environmental and social impact into their business and in interactions with stakeholders. The primary audiences for CSR tend to be customers, employees, and communities, and it is frequently linked to philanthropy and workplace volunteering.

Corporate Sustainability vs. Corporate Social Responsibility venn diagram for ESG

Sustainable Investing vs. Impact Investing

  • Like the concept of corporate sustainability, sustainable investing refers to a long-term investment strategy that considers the environmental and social implications of investments in addition to economic impact and financial return. It is sometimes synonymous with responsible investing or socially responsible investing (SRI).
  • Impact investing is more akin to CSR – it refers to an investment strategy that is focused on creating positive environmental and social impact, as well as positive financial returns.

Sustainable Supply Chains and Third-Party Risk Management

  • Sustainable supply chain refers to the integration of sustainable and ethical practices across the value chain to build a more responsible supply chain and reduce risk. This includes setting and tracking ESG targets and performance as part of supplier due diligence.
  • Third-party risk management (TPRM) is a form of risk management that focuses on identifying and mitigating risks related to the use of third parties such as vendors and partners. TPRM is designed to help organizations be more resilient by giving them an understanding of the third parties they use, how they use them, and what safeguards are in place.

Linear vs. Circular Economy

  • Our current “take, make, waste” system is sometimes referred to as a linear economy. By contrast, a circular economy is a regenerative production and consumption system with the aim of extending product life cycles to minimize use of the world’s resources, reduce waste, and decrease carbon emissions. This is achieved through sustainable design, production, recycling, reusing, and refurbishing so materials can be used again and again. The circular economy is viewed as a key enabler for achieving global net-zero emissions, making it a high priority on the policy agenda of governments and organizations worldwide.

Circular Economy Diagram Referencing ESG

Sustainable Development and the Sustainable Development Goals

  • Like the Brundtland definition above, sustainable development refers to a business or economy’s ability to mature and increase its capabilities without compromising the sustainability of the world’s resources for today and tomorrow.
  • Adopted in 2015 as part of the 2030 Agenda for Sustainable Development, the 17 United Nations Sustainable Development Goals (UN SDGS) are an urgent global call to action to end extreme poverty, promote individual wellbeing, and protect the planet. The SDGs provide a great lens for companies to share how they are addressing and positively contributing to these global issues with their stakeholders. The UN Global Compact is a voluntary initiative and principles-based framework that aims to help businesses implement principles and actions to support the SDGs. To that end, it provides a guide to help companies integrate the SDGs into their reporting.

How is the Regulatory Environment Changing?

Regulatory bodies around the world are introducing new ESG mandates to protect human rights and the environment that are impacting how companies define, track and report on ESG issues. Examples include regulations for anti-slavery, supply chain transparency, due diligence and ESG disclosure requirements, data privacy, minimum wage, workplace health and safety, and whistleblower protections.

The EU, which is further along than other regions, has led the development of several pivotal regulations and disclosure guidance including GDPR, Directive on Corporate Sustainability Due Diligence, EU Taxonomy, CSRD and SFDR.

A representative list of existing and pending regulations and guidance that are relevant to each ESG pillar follows.

Environmental

  • ESG disclosures are required in the US, UK, and Canada. The CSRD (EU) requires disclosures across all three ESG pillars.
  • The proposed SEC Climate Disclosure Rules (US) for companies and fund managers are based on broadly accepted disclosure frameworks and accounting methodologies, such as the Task Force on Climate-Related Financial Disclosures (TCFD) and the Greenhouse Gas Protocol. The intention of these proposed rules is to enhance and standardize climate-related disclosures to address investor needs.
  • The Inflation Reduction Act (US) introduces several new environmental taxes, incentives, and penalties, including a minimum 15% corporate tax to help pay for climate measures. The latter applies to companies generating at least $1billion in earnings annually.
  • Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 (UK) states that, from April 1, 2019, all large companies are required to include within their director’s report information on GHG emissions, energy usage, an intensity matrix, and energy efficiency improvements for any financial year that begins on or after this date. These regulations update existing reporting requirements for listed companies and introduce new reporting requirements for large companies and limited liability partnerships.

Social

  • Due diligence and supply chain disclosure requirements are required in the EU and Germany to make large companies more accountable for environmental and human rights harm across their supply chain.
  • Modern slavery disclosures are required in the US (CA), UK, and Australia. In the UK, the Modern Slavery Act 2015 is designed to combat modern slavery and consolidates previous offenses relating to trafficking and slavery.
  • The Dodd-Frank Consumer Protection Act (US) was designed to protect consumers from abusive financial practices and safeguard capital markets by improving accountability and transparency in the financial system.
  • The proposed Declaration on Digital Rights and Principles (EU) addresses individual digital rights including data privacy, safety, security, education, inclusion, etc.
  • The US Senate Committee on Financial Services is considering legislation on diversity data disclosures that would require companies to disclose the racial, ethnic, and gender makeup of their employees and what measures they are taking to improve diversity, equity, and inclusion.
  • The EU Whistleblower Protection Directive specifies that employees, former employees, subcontractors, shareholders, suppliers, and other third parties will be protected from dismissal, suspension, demotion, and other forms of whistleblower retaliation, in response to submitting a whistleblower report. Additionally, those who support a whistleblower are also protected from experiencing retaliation.
  • Privacy and data protection laws are in place in many countries, including the US (Federal and State), UK, EU, Japan, Brazil, and Thailand.

Governance

  • Board diversity disclosures are required in the US (NASDAQ) and eight EU countries. The EU has also agreed on a draft bill that would require at least 40% of non-executive director posts or 33% of all director posts be occupied by the under-represented gender by June 30, 2026.
  • CEO pay ratio and pay equity disclosures are required in the US and UK. The EU is also likely to implement pay transparency legislation within the next few years.

ESG Reporting is Essential for Building Stakeholder Trust

Establishing a strong ESG program can improve your brand image, reduce risk, positively impact revenue and company valuation, and enhance overall market perception. But leveraging your sustainability program to nurture trust requires regular and transparent ESG reporting to a broad range of stakeholders including customers, employees, suppliers, industry partners, government entities, and others.

Proactively disclosing your ESG risks, opportunities, commitments, and progress shows important stakeholders that you are on the right track. By contrast, companies that choose not to publicly report on their ESG programs may struggle to gain stakeholder trust, and face challenges such as increased costs, declining productivity, and loss of market share.

Being clear, transparent, and authentic in your communication is also key. Stakeholders want to see accountability and measurable improvement, not perfection. Companies that fail to do this and only provide vague, high-level claims may be accused of greenwashing.

Who are ESG stakeholders and what metrics matter to them?

ESG stakeholders can include anyone with a direct or indirect interest in a business and its impact on people and the planet. With that said, the stakeholder groups below exert a particularly strong influence on how organizations implement and report on ESG programs.

Gaining a deeper understanding of what these critical audiences care about helps you report on ESG metrics in the ways that are most relevant and meaningful to each unique group.

  • Investors use ESG criteria and ratings to target investment into ethical and sustainable assets. Interest in ESG investing has soared in recent years. According to estimates from Bloomberg Intelligence, it could reach $50 trillion by 2025. And per Morgan Stanley, 70% of investors believe that their decisions can have an impact in fighting climate change. When considering investor interests, your main task is to identify ESG risks and opportunities that may positively or negatively impact your company’s valuation and financial performance.
  • Customers prefer to purchase from brands that share their values. 74% believe that ethical corporate practices and values are an important reason to choose a brand, and 66% plan to make more sustainable or ethical purchases over the next six months. 67% of consumers also support carbon-labeling on products.
  • Employees want to work for ethical and sustainable enterprises where gender, pay and racial equality are top priorities. Increasingly, the commitment and action taken on ESG initiatives by a corporation drive its attractiveness as both a brand and a potential future employer. Employees who strongly agree their organization makes a positive impact on people and the planet are also 3.1x more likely to be extremely satisfied with their organization as a place to work. And nearly 8 in 10 of 3,500 employees who responded to a Harvard Business Review survey indicate sustainability is important to them.
  • Business Partners use vendor ESG ratings/scores to find ethical and sustainable partners and suppliers. Requesting information about the sustainability practices of a business is becoming a standard ask in RFPs and an important factor in vendor selection.
  • Nonprofits and NGOs are at the forefront of driving ESG regulations, standards, and reporting frameworks. Examples include IFRS, CDP, SASB, GRI, and more.
  • Governments around the world are introducing new due diligence and ESG disclosure requirements as noted in the previous section.
  • Local Communities are often the beneficiaries of corporate philanthropy because businesses directly impact the communities in which they operate. In 2021, nearly 6 in 10 companies reported an increase in community investments over the past three years. Employees are also demanding it: 70% of employees expect opportunities for social impact, and 72% of job seekers are more willing to apply for a job at an organization they consider to be socially responsible.
  • Raters/Scorers such as Sustainalytics, MSCI, ISS, etc. are independent monitors who assign companies, especially public ones, with sustainability scores. Industry organizations who spotlight purpose-driven companies in recognition categories such as “Most Sustainable…,” “Most Ethical…,” etc. rely on these independent raters to identify sustainability leaders and laggards. A low rating may not indicate improper practices, but a lack of data or data-transparency. By prioritizing ESG and sharing your findings, you can improve these important scores.

Key ESG Reporting Frameworks and Standards

A variety of ESG reporting frameworks and standards have evolved to meet the needs of different stakeholders and industries. While many of them are not (yet) mandatory, they represent best practices that can help organizations meet stakeholder requirements and comply with emerging regulations around the world. Determining which ESG issues are important to your business and stakeholders (material topics) is an important first step. The ESG Program Checklist can help you get started.

ESG reporting is categorized as non-financial reporting because, while ESG issues can impact financial valuation or performance, they do not have corresponding financial figures. ESG disclosure standards typically require companies to submit an assessment of their business model, policies, and key performance indicators that determine how they operate and manage social and environmental risks and opportunities. In this section, we cover examples of target setting guidance, as well as reporting frameworks and standards available to companies.

Target Setting

Organizations seeking to develop an ESG reporting strategy often turn to existing reporting frameworks or standards to guide them in crafting an ESG reporting process that meets their specific corporate financial and social responsibility goals.

SBTi: The Science Based Targets initiative (SBTi) is a global coalition promoting science-based targets (SBTs) to strengthen business participation in the shift to a carbon neutral economy. SBTs are goals that organizations set to reduce their greenhouse gas (GHG) emissions in line with the 2015 Paris Agreement to mitigate the worst effects of climate change. The Paris Agreement provides a framework for limiting global warming to no more than 2°C while striving to limit it to 1.5°C. More than 3,000 organizations, representing $38 trillion in the global economy, have committed to SBTs.

SBTi Net Zero Standard Target Setting Process

UN SDGs: The 17 SDGs provide a great lens for companies to share how they are addressing and contributing positively to global societal and environmental issues. While it is voluntary, more than 17,000 companies based in 160+ countries are already active participants in the UN Global Compact. Moreover, aligning with the SDGs can also positively impact the bottom line. According to research by S&P Global, 49% of revenues of the 1,200 largest global companies come from business activities that support the SDGs.

ISO standards are international standards representing the agreed-to best practices for various business processes. ISO standards commonly referenced for ESG program management and reporting include environmental management (ISO-14001), energy management (ISO-50001), social responsibility (ISO-26000), health and safety (ISO-45001), quality management (ISO-9001), IT security (ISO/EIC-27001), risk management (ISO-31000), and anti-bribery management (ISO-37001).

Reporting Frameworks and Standards

IFRS global sustainability reporting standards: The International Financial Reporting Standards (IFRS) replaced the International Accounting Standards (IAS) in 2001. Its purpose is to provide accounting rules that public companies can use to ensure their financial statements are consistent, transparent, and comparable globally. Although the US and China do not currently use IFRS, it is used by more countries than any other accounting standard. In 2021, the IFRS Foundation established the ISSB to develop a global baseline of sustainability disclosure standards to give companies a consistent set of rules for reporting ESG information. This will make it easier for investors to compare apples to apples when assessing enterprise value.

The proposed EU sustainability reporting standards (ESRS), if adopted as part of EU’s Corporate Sustainability Reporting Directive (CSRD), outline detailed reporting requirements across 13 ESG issues as well as audited assurance on the information disclosed.

SASB: Founded in 2011, the Sustainability Accounting Standards Board (SASB) standards are designed to help companies disclose financially material sustainability information to their investors. They identify and enable reporting on ESG issues most relevant to financial performance in 77 industries. Originally developed by the Value Reporting Foundation (VRF), a global nonprofit, the VRF has since consolidated with the IFRS.

The Global Reporting Initiative (GRI) is an independent, international standard setting institution and collaborating center of the United Nations Environment Program (UNEP). Used globally by many companies (>10k) to disclose ESG performance, GRI standards provide a comparable, interconnected system that organizations can use for their impact reporting and/or decision-making.

CDP: Formerly the Carbon Disclosure Project, CDP is an investor-led nonprofit focused on motivating companies, cities, states, and regions to measure and disclose their environmental impacts and take action to reduce them. It runs a global disclosure system, known as the CDP Online Response System (ORS) that organizations use to report sustainability information requested by their stakeholders.

The Task Force on Climate-related Financial Disclosures (TCFD) is  focused on improving corporate transparency around climate risk in financial disclosures to help investors make better decisions. Currently ten countries, including the US, EU, UK and Canada, have announced TCFD-aligned reporting requirements.

WEF Stakeholder Capitalism Metrics: The World Economic Forum’s Stakeholder Capitalism Metrics (SCM) are a common set of ESG disclosure standards and metrics for stakeholders developed in 2020 by a collaboration of 120 of the world’s largest companies at an annual meeting of the WEF. They are drawn wherever possible from existing standards and disclosures, with the aim of amplifying the rigorous work already done by standard-setters rather than reinventing the wheel.

Common ESG Metrics Mapped to the SDGs

Once the reporting standard is selected and ESG data is collected, it’s not typically a huge lift to report to multiple ESG reporting frameworks. To make it easier, the following infographic illustrates common ESG disclosure metrics, or impact areas, across each ESG pillar, along with how each pillar maps to the SDGs.

Common ESG disclosure metrics Chart

ESG Program Management: Setting Up for Success

How Does Sustainability Benefit Business Leaders?

Earlier we explored how different stakeholder groups view sustainability. Diving a bit deeper by business role helps ensure your program and priorities will resonate with the corporate decision makers who are in the best position to invest in and advance ESG initiatives.

The reality is that a strong ESG strategy helps executive leaders solve significant business challenges. The following list highlights some executive pain points that the right sustainability strategy can improve, or remove:

Group of Diverse People with Talk bubbles relating to ESG

CEO

A CEO needs to identify, communicate, and manage the risks and opportunities that could impact overall brand image, valuation, or financial performance of the company.

  • Focus: Maximizing ESG advantages for our business.
  • Pain points: Declining innovation and market share, increasing risks and costs, high turnover
  • Audiences: Board, investors, customers, partners, employees
  • Needs/Questions:
    • What is the ROI of our ESG efforts so I can report to key audiences?
    • How can our ESG program help improve our business results, competitive advantage, and brand reputation
    • How can our ESG program help reduce risks and costs?
    • I want to benchmark our ESG score/rating against others in our industry to identify gaps and opportunities to improve.
  • Alternate titles: Founder, President, Executive Director (nonprofits)

CFO/Investor Relations

A CFO is concerned with identifying, communicating, and managing risks and opportunities that could impact overall valuation or financial performance of the company.

  • Focus: Addressing ESG impacts on valuation and financial performance.
  • Pain points: Declining valuation and revenues, increasing costs, slower growth without ESG focus, challenges gaining new financing, higher cost of capital, ESG disclosure requirements from investors and regulators
  • Primary audiences: CEO, board, investors, regulators
  • Secondary audiences: Customers, partners, employees
  • Needs/Questions:
    • How can our ESG program improve our valuation and financial performance?
    • What are the key ESG disclosure regulations, accounting methodologies, and reporting frameworks we need to align with in our financial reporting?
    • What is the ROI of our ESG efforts so I can report to key audiences?
    • What are the ESG risks that may negatively impact our valuation or revenues? How can we mitigate these risks and reduce costs?
    • I want to measure our ESG score/rating to see the impact on our financial performance, reduce risk, and identify gaps and opportunities to improve.
    • I need portfolio-level visibility into ESG metrics to make strategic investment decisions and/or to better manage our finances for investor value.
  • Alternate titles: Treasurer, Chief Accountant, Chief Investment Officer, Chief Business Officer, Chief Credit Officer, Chief Budget Officer

CMO/Sales

A Chief Marketing Officer (CMOs) needs to drive leads through marketing programs, platforms, and channels. CMOs may be responsible for public relations (PR), brand, communications, content, digital marketing, product marketing, and more. A Chief Sales Officer is responsible for developing new business and meeting sales/revenue targets.

  • Focus: Capitalizing on our ESG advantages to build brand reputation, drive demand, and grow market share.
  • Pain points: Negative brand reputation without ESG focus, reputational damage, competitive disadvantage, declining market share, pressure from customers to align with ESG criteria, weakening customer loyalty.
  • Primary audiences: CEO, marketing/sales, employees
  • Secondary audiences: Customers, partners, board, investors, regulators
  • Needs/Questions:
    • How can our ESG efforts help improve our brand reputation?
    • What ESG advantages can we promote in our marketing and sales outreach?
    • What are the ESG risks that may negatively impact our brand or market share? How can we mitigate these risks?
    • I want to measure our ESG score/rating and benchmark against others in our industry to see the impact on our brand and identify gaps/opportunities to improve.
    • I need to respond to customer RFPs that have specific ESG requirements we need to align with.
  • Alternate titles: Chief Brand Officer, Chief Reputation Officer, Chief Communications Officer, Chief Content Officer, Editor in Chief, Chief Web Officer, Chief Business Development Officer, Chief Revenue Officer, Chief Commercial Officer, Chief Growth Officer, Chief Visibility Officer (retail)

HR/Diversity/Culture/Citizenship

A Chief Human Resources Officer (CHRO) is responsible for all human resources functions in the employee experience including employer branding, talent acquisition, and retention. This may include some additional aspects of the ‘S’ in ESG if it’s not a separate role such as Diversity & Inclusion, Community Relations, or Culture and Purpose.

  • Focus: Leveraging ESG benefits for our brand as an employer and as a corporate citizen.
  • Pain points: Low employee engagement, high turnover, increasing hiring costs, and negative employer brand reputation without ESG focus. ESG disclosure requirements on S pillar from investors and regulators. Pressure from marketing/sales, customers, partners, and employees to align with ESG criteria.
  • Primary audiences: CEO, marketing/sales, employees
  • Secondary audiences: Customers, partners, board, investors, regulators
  • Needs/Questions:
    • How can our ESG program help improve our brand and employee experience?
    • What are the key ESG disclosure regulations and reporting frameworks we need to align with for social responsibilities?
    • How can our ESG efforts help mitigate our employee and social risks?
    • I want to benchmark our ESG score/rating against others in our industry to identify gaps and opportunities to improve.
  • Alternate titles: Chief People Officer, Executive Vice President of Human Resources, Chief Talent Officer, Chief Diversity Officer, Chief Inclusion Officer, Chief Culture Officer, Chief People & Culture Officer, Chief Employee Experience Officer, Chief Happiness Officer, Chief Trust Officer, Chief Impact Officer, Chief Social Impact Officer, Chief Purpose Officer, Chief Corporate Social Responsibility Officer, Chief Social Responsibility Officer, Chief Corporate Citizenship Officer

Head of Sustainability/ESG

A Chief Sustainability Officer needs to work with functional stakeholders to identify, report on, and track material ESG risks and opportunities for the company. This includes collecting the pertinent ESG data and determining clear, actionable steps for goal setting, reporting, and progress tracking. Understanding and applying key ESG accounting and reporting methodologies is also an essential responsibility.

  • Focus: Establishing and managing a successful ESG program.
  • Pain points: Challenges integrating ESG objectives and metrics across multiple functional groups, complexity in gathering data, no single globally recognized set of metrics to benchmark ESG progress against, ESG disclosure requirements from investors and regulators, time-consuming to manually report against multiple ESG frameworks, need help with carbon accounting and reduction, inability to track disclosures and goal tracking over time
  • Primary audiences: CEO and all internal C-Suite
  • Secondary audiences: Customers, investors, regulators, partners, employees
  • Needs/Questions:
    • How can I prove the business case/ROI for our ESG initiatives to senior leadership?
    • I need to identify the material ESG risks and opportunities for our company.
    • What are the key ESG disclosure regulations, accounting methodologies, and reporting frameworks we need to align with?
    • I need help getting started, calculating ESG metrics, or developing improvement plans.
    • I want to reduce the time and effort associated with gathering ESG data and metrics from multiple teams across the organization.
    • How can I streamline and automate ESG reporting and progress tracking?
    • What’s the best way to drive progress and show results?
    • I want to benchmark our ESG score/rating against others in our industry to identify gaps and opportunities to improve.
  • Alternate titles: Chief Climate Officer, Head of ESG Reporting, Head of ESG, Chief ESG Officer, Chief Green Officer, Chief Environmental Officer, Chief Environmental Commitment Officer, Chief Carbon Officer, Head of Sustainable Operations, Head of Responsible Business

COO/Procurement

A Chief Operating Officer (COO) needs to understand and address any risks or issues that could impact day-to-day operations (upstream or downstream). Procurement teams have a major role to play in identifying and managing any upstream ESG risks related to third-party partners, suppliers, and vendors that could impact the organization.

  • Focus: Minimizing third party ESG risks. Building a responsible supply chain.
  • Pain points: Supply chain resiliency to ESG risks, challenges with vetting third parties for ESG risks and opportunities that could impact our operations, negative attention from partnering with third parties that have high ESG risks, negotiation challenges, ESG supply chain disclosure requirements
  • Primary audiences: CEO, CFO, Board, partners, regulators
  • Secondary audiences: Customers, employees, investors
  • Needs/Questions:
    • I need to vet our third-party suppliers and partners for key ESG criteria to minimize risk and ensure they are aligned with our requirements.
    • How can I identify and manage the third party ESG risks and opportunities that could impact our operations
    • What are the key supply chain ESG disclosure regulations, accounting methodologies, and reporting frameworks we need to align with?
    • I need portfolio-level visibility into ESG metrics of our suppliers to make strategic partnering decisions.
  • Alternate titles: Head of Operations, Chief Supply Chain Officer, Chief Supply Chain Management Officer, Chief Partner Officer, Chief Partnerships Officer, Chief Sourcing Officer

Risk/Compliance/Legal

Risk/Compliance/Legal Officers must identify and manage any risks that could impact the business, as well as ensure compliance with all relevant regulations.

  • Focus: Minimizing ESG risks and ensuring regulatory compliance.
  • Pain points: Business resiliency to ESG risks, proliferating ESG regulations and reporting requirements, heightened supply chain/political/reputational/operational risk, regulatory and civil hazards, lack of control and oversight
  • Primary audiences: CEO, CFO, COO, Head of ESG, Board, regulators
  • Secondary audiences: Customers, employees, partners, investors
  • Needs/Questions:
    • How can I identify and mitigate ESG risks that could impact our business?
    • How can our ESG program help reduce risks and exposure?
    • What are the key ESG regulations, accounting methodologies, and reporting frameworks we need to align with?
    • How can I include ESG metrics into our risk assessment and management process?
    • I want to measure our ESG score/rating to reduce risk and identify gaps and opportunities to improve.
    • I need portfolio-level visibility into ESG risks across our value chain to make strategic business resiliency decisions.
  • Alternate titles: Chief Risk Officer, Principal Risk Officer, Chief Compliance Officer, Chief Risk and Compliance Officer, Chief Risk Management Officer, Head of Operational Risk, General Counsel, Chief Legal Officer, Chief Security Officer, Chief Ethics and Compliance Officer, Chief Governance Officer, Chief Corporate Governance Officer, Head of Corporate Governance, Head of Compliance and Regulatory Affairs, Head of Compliance and MLRO (EU), Chief Resilience Officer, Chief Resiliency Officer, Chief Privacy Officer, Head of Internal Controls, Chief Underwriting Officer (financial services), Head of Information Security, Information Security Officer, Head of Non-Financial Risk, Head of Remediation, Chief Trust Officer

How to Build the Business Case for ESG

Once you better understand the challenges leaders are facing, you’ll be ready to make your case for how a smart sustainability strategy can help. Be sure to emphasize not only the many ways in which the environment and society benefits, but also the significant advantages the company gains.

These benefits include:

1. Improved employer attractiveness and employee engagement
When it comes to choosing an employer, a company’s sustainability agenda is now a critical selection criterion – 92% of people would consider changing jobs if offered a role with a company that has an excellent corporate reputation. Moreover, corporate sustainability can strengthen employee engagement, which, in turn, can lead to higher productivity, increased innovation, lower attrition, and reduced hiring costs. One survey found that a strong employer brand can reduce the cost per hire by as much as 50%.

2. Decreased costs
A strong ESG program can contribute to decreased expenses across the board. Examples include lower costs in operations (energy, water, materials, waste, maintenance, insurance), HR (productivity, hiring), regulatory compliance, access to capital, etc.

3. Increased investor attractiveness
Investors are interested in companies that incorporate sustainability in their business strategies and work for a clear purpose – 73% say to win their support, companies must show how they are supporting communities and the environment.

4. Easier partner relationships
Businesses are increasingly using vendor ESG ratings/scores to find ethical and sustainable partners and suppliers. As a case in point, over 200 major companies representing US $5.5 trillion in procurement spend, requested ESG disclosures from 23,487 suppliers in 2021.

5. Greater regulatory agility
Between 2016 and 2020, the number of ESG reporting provisions issued by governmental bodies increased by 74%. Today there are more than 1,200 reporting requirements worldwide, of which nearly 80% are mandatory. Anticipating new regulations allows you to adapt ahead of time.

6. Stronger brand reputation, trust, and credibility
Every company is embarking on a transformation – from siloed compliance initiatives to trust intelligence – and ESG sustainability is a core part of that. Many brands that implemented sustainability at the core of their business model in the past now enjoy an exemplary reputation that grants them enduring customer trust and loyalty. Even more telling, trusted companies outperform the S&P 500 by 30 to 50 percent. Building businesses based on trust, rather than simply compliance, positions you to be a leader across ESG, privacy, risk, and
ethics to drive growth and create impact.

7. Deeper customer loyalty
Now more than ever, customers expect products and services to be sustainable and not harmful to the environment or society. Businesses that do not meet their expectations lose opportunity and leave themselves at a competitive disadvantage.

The following resources can help you get started with building and communicating the business case for your ESG sustainability initiatives:

These toolkits can help you establish a successful ESG program that will serve as a central source of organizational growth, differentiation, and improvement for years to come.

5 Easy Steps to Jump Start Your ESG Program

Having a strong ESG program can reduce risk and expand opportunities, directly impacting company performance and valuation. As you begin your ESG journey, set yourself up for success by identifying the right stakeholders and evaluating the high impact factors in your industry as well as those of your specific organization. Remember that these will be both internal and external, spanning your upstream and downstream supply chain. For practical guidance on how to get started, download the ESG Program Checklist.

Take 5 Simple Steps:

1. Define
Clarify the purpose, roles, and goals for your ESG program. These may be dynamic and subject to review and updating as circumstances dictate.

2. Prepare
Set up your ESG program and governance structure. Create your stakeholder map and gather preliminary data. Decide which reporting frameworks and standards you will use.

3. Assess and measure
Define materiality by stakeholder. Select and prioritize the ESG issues most relevant to your industry and stakeholders. Consider double materiality (outside-in and inside-out) to determine material ESG metrics and topics. Collect the data needed to build your ESG report from surveys, application integrations, and data loads. Determine key ESG risks and opportunities.

ESG Program Checklist Double Materiality

4. Act
Set improvement targets and make the business case for your improvement action plans. Implement your improvement plans and track progress over time.

5. Communicate
Show your stakeholders that you value transparency by publishing your results. Be open, clear, and transparent in your ESG reporting to build trust. Avoid vague, exaggerated claims and demonstrate your commitment to improvement, even if you miss your targets.

How OneTrust Can Help

As the market-defining leader for trust intelligence, OneTrust believes what’s good for society is good for business. More than ever, consumers, employees, and investors are making their decisions based on trust. They want to buy from, work for, and invest in businesses that share their values and demonstrate positive impact on people and the planet.

The OneTrust ESG & Sustainability Cloud makes it easier to answer this call with clear target setting, automated reporting, and transparent benchmarking. Set your ESG program up for success and instill trust with your stakeholders by defining your core sustainability metrics, tracking progress toward those goals, and transparently sharing your results.

  • Our cloud-based, fully integrated platform helps you demonstrate impact and drive change through features including:
  • Streamlined, centralized ESG data collection
  • Automated ESG reporting that saves you time
  • A global database of ESG frameworks that keeps you up to date
  • Centralized target setting, benchmarking and gap analysis that accelerates your goals
  • Real-time action-oriented insights that equip you to adapt and respond fast
  • Carbon accounting capabilities to help you calculate, track, reduce and offset your carbon footprint
  • Proven templates and workflows that make it easier to collaborate on ESG priorities across your enterprise, portfolio, and supplier base

The ESG Cloud is also part of the Trust Intelligence Platform™ from OneTrust that unifies and delivers visibility across four trust domain areas (ESG, GRI, ethics, and privacy). Empower your organization to collaborate seamlessly and unlock value by doing what’s good for people and the planet.

 

To learn more about how OneTrust ESG & Sustainability Cloud can help you make, meet and report on your ESG commitments in ways that build trust and demonstrate impact, request a demo.

You may also be interested in downloading the Ultimate Guide to ESG Sustainability: Building a Successful ESG Program to Foster Trust.

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