10 ESG Questions Companies Need to Answer (2024)

FAQs

10 ESG Questions Companies Need to Answer? ›

ESG metrics can be divided into two main categories: quantitative and qualitative. Quantitative metrics are based on numerical data that often can be directly measured and compared. Examples of quantitative ESG metrics include greenhouse gas emissions, energy usage, employee turnover rates and reported HR violations.

ESG metrics can be divided into two main categories: quantitative and qualitative. Quantitative metrics are based on numerical data that often can be directly measured and compared. Examples of quantitative ESG metrics include greenhouse gas emissions, energy usage, employee turnover rates and reported HR violations.

Companies are evaluated based on publicly available information such as media sources and annual reports, with scores given for each material 'E', 'S' and 'G' topic, alongside an overall score. Investors use these unique scores as a proxy of ESG performance.

Environmental and societal issues, such as climate change, biodiversity loss, modern slavery, inequalities, food security and others are interconnected and lead to risks and opportunities for both, businesses, and society.

An ESG checklist is a useful tool for evaluating an organization's environmental, social and governance practices and the risks associated with each of these areas.

Manufacturing is one of the industries with the greatest impact on the environment, society, and governance. Significant ESG concerns threaten its long-term viability and competitiveness.

Adopting ESG principles means corporate strategy focuses on environment, social, and governance. This means taking measures to lower pollution, and CO₂ output, and reduce waste. It also means having a diverse and inclusive workforce, at the entry level and the board of directors.

ESG issues are essentially business issues, categorized as environmental, social, or governance in nature. They are sustainability-related considerations on par with traditional financial factors like economic contributions and financial returns.

What is an ESG KPI? ›

What is an ESG KPI? ESG key performance indicators, or KPIs, are trackable figures meant to help firms understand the environmental, social and governance impact of their operations.

Common ESG KPIs include carbon emissions output, renewable energy usage, recycling and waste reduction initiatives, social and community engagement initiatives, gender diversity ratio, employee turnover rate, and board diversity amongst many others.

ESG scores are generated by rating platforms where analysts evaluate corporate disclosures, conduct management interviews, and review publicly available information about an organization to provide an objective rating of the organization's performance.

The MSCI scores companies to determine their ESG factors based on the OBSI® (Outcome-based Sustainability Investment) platform, which takes into account environmental, social, and governance issues that are then translated into indices.

Oversight of ESG programs often begins at the board level or in the C-suite, with the CEO, COO or executive committee as a whole taking the management lead. Some companies have now added a chief sustainability officer or a chief ESG officer to lead their corporate programs.

Key questions to ask suppliers:

Are they made from recycled fibres? Where are they from? Do you have an environmental management system in place? Is it consistent with an internationally accepted standard, e.g. ISO 14001?

In this context, the Big 4 accounting firms - Deloitte, PwC, Ernst & Young (EY), and KPMG - play a pivotal role in shaping corporate strategies, reporting practices, and, ultimately, the sustainability divide.

ESG risks include a company's environmental, social, and governance factors that could cause reputation or financial harm.

While all three factors are important, the 'E' in ESG - Environmental - is perhaps the most critical, especially in light of the growing concerns around climate change and environmental issues. Common ways to address this issue is to lower greenhouse gas emissions and reduce carbon footprint.