ESG strategy guide
An Environment, Social & Governance (ESG) strategy is an organisation’s plan to address environmental, social and governance considerations, all of which are essential for sustainable and ethical practices. For your organisation, this involves reducing environmental impact, fostering social responsibility, and ensuring transparent and accountable governance. By adopting an ESG approach, organisations demonstrate their commitment to sustainability, ethical leadership and positive community impact – enhancing trust, credibility and resilience with employees, clients, funders, regulators, investors and other stakeholders.
While developing an ESG strategy might initially seem overwhelming, it doesn’t have to be. This guide will break the process into manageable steps, helping your organisation embrace ESG principles with clarity and confidence.
Creating an ESG strategy
Setting up your Green Team
The first stage of your ESG strategy process will be to set up an ESG committee or advisory group, often referred to as a “Green Team”. It is recommended that this group consist of senior staff within the organisation who have an interest in ESG matters. It is crucial that members of this group are sufficiently trained, either internally or by trusted external experts, as these people will be ESG champions within your organisation. The purpose of the ESG Committee should be to work towards embedding a culture that effectively prioritises ESG principles within your organisation.
Baseline and reporting standards
Once the ESG Committee is set up and trained, the next stage is to establish a baseline and conduct a materiality assessment, which is key when developing ambitions and measuring progress. The topics and requirements will be outlined in a reporting standard of your choice, such as the Global Reporting Initiative (GRI) or the Voluntary Sustainability Reporting Standard for non-listed small-to-medium enterprises (SMEs) (VSME). The benefit of aligning your reporting with a recognised ESG reporting standard is an assurance of consistency, transparency and credibility, and it enables stakeholders to compare your performance to your peers, builds trust through clear disclosures, and facilitates meeting regulatory or funding requirements. Standards also help organisations to identify gaps, ensuring your ESG strategy remains effective, accountable, and aligned with best practices.
Your chosen reporting standard can have an available index which outlines the reporting requirements you will need to align with. This will assist you in analysing areas within the three headings of Environment, Social and Governance, such as HR, IT, Finance, etc. Some standards might not have an index, and an alternative method, such as an Excel-based tracker, may need to be created in order to use these standards. When doing your analysis, you may encounter data your organisation is not currently monitoring. This is normal, and a “nil” baseline is a helpful indicator of an area where activity needs to be monitored in the future. This process will also involve a materiality assessment, and this is used to identify which sustainability challenges are important to prioritise. Your materiality assessment will also shape your stakeholder engagements, such as a staff survey or focus groups.
Benchmarking and consultations
Once you have established your baseline, you can benchmark your performance. This involves analysing the activities and sustainability measures of other organisations similar to your own, which will provide an inward and outward viewpoint. The goal of setting your baseline and completing a materiality assessment and a benchmarking exercise is to identify gaps in performance and proactively uncover opportunities to improve them, thus making the ESG processes more efficient, reducing costs associated with changing to sustainable methods, and allowing for an overall improvement in the mechanisms used within your organisation to be more sustainable.
As you establish your baseline, conducting stakeholder consultations is a crucial step. These can take place alongside or after the baselining process, depending on the capacity available within your organisation. To ensure a well-rounded ESG strategy, both internal and external stakeholders should be consulted and should aim to capture multiple perspectives. Start by creating a stakeholder list and map, which will allow you to identify key voices that should be heard from in the process. Then, develop a set of targeted questions to guide discussions. Consultation methods will vary based on your organisation’s needs and could include a mix of interviews, focus groups, surveys, and other engagement approaches best suited to your stakeholders. A comprehensive and inclusive consultation process will help shape a more effective and impactful ESG strategy.
Setting your ambitions
Once the baseline assessment, benchmarking and stakeholder consultations have been completed, your organisation will have gathered valuable insights into its current ESG position, industry standards, and stakeholder expectations. This information serves as the foundation for developing and setting your ambitions. The ambition-setting process should be conducted with the ESG Committee, ensuring a collaborative and practical approach. During this session, strategic priorities, key goals and long-term objectives will be discussed. It is important to consider both short-term actions and long-term desired outcomes, ensuring they are realistic yet ambitious. By the end of this exercise, your organisation will have a first draft of its ESG strategy, including clearly defined key performance indicators (KPIs) for each strategic objective. This draft should then be shared with management and your organisation’s Board for feedback, further refinement if needed, and ensuring full alignment with the organisation’s corporate vision and governance.
Finalising your strategy
Once the outline is completed, it’s time to finalise your ESG strategy. The finalisation stage entails gathering all the information from the previous stages to develop a complete strategy. Furthermore, you will need to write an implementation plan to support the strategy, which will detail the strategic objectives and corresponding strategic actions required to deliver them. The strategy needs to be ambitious yet achievable within the set time frame. The final strategy will be presented to the Board to ensure it reflects the goals of the wider organisation, allowing the Board members to challenge, reaffirm, and/or modify it. This input will be reflected in the final document, which will clearly outline the ESG objectives, the implementation plan for achieving the objectives, how success will be measured, and the systems that will need to be in place to support the measurement of these objectives for your organisation. Once the ESG Committee has signed this final draft off, it can be presented to the Board for final approval.
Once the Board has approved your final ESG strategy, it should be uploaded to your website and circulated to key stakeholders, staff and funders. This can be an overlooked step in the process, but it improves a strategy’s adoption by creating buy-in from those within your organisation and any external service users and funders. Ensuring all stakeholders have access to the strategy will ensure accountability for the strategy and its implementation.
Conclusion
Developing a strong ESG strategy now can help organisations stay ahead of evolving regulations and stakeholder expectations, fostering long-term resilience and sustainability. As the ESG landscape continues to evolve, organisations that integrate an ESG strategy into their organisation will be better prepared for future challenges and opportunities. Taking proactive steps can make it easier to adapt to future regulatory and legal requirements while also enhancing transparency and accountability.
If you are looking to begin your ESG journey or need any assistance with any step of the process, further guidance is available by contacting us at esg@crowe.ie.
