ESG: What is it and Why do we Care? (Part-VI)


Download

Get Full-Version

SDG Alignment

What are SDGs?

The Sustainable Development Goals (SDGs), adopted by the global community as part of the UN’s 2030 Agenda for Sustainable Development, are a total of 17 Sustainable Development Goals. Underlying these goals are 169 SDG targets and an even greater number of key performance indicators.

The SDGs are being embraced around the world by the corporate sector, the investment community, the social community, governments and by other key stakeholders.

SDG

As investors, governments and other stakeholders around the world start to measure their own progress on the SDGs, the leaders are looking for ways to collaborate and partner with the private sector to help in reaching their stated goals. Among the benefits of collaboration on SDGs are more favorable regulatory terms, business-friendly policies, and other competitive advantages for companies that align with these global goals. Hence, corporate leaders are adopting select goals relevant to their business/mission and structuring programs and actions around the SDGs.

How to align sustainability initiatives with SDG goals?

It’s important to recognize that all SDGs may not be relevant to every business, and where there are relevant SDGs, not every underlying SDG target will be relevant to the business and its stakeholders. The strategic decision to be made by each company is to determine what really matters to their business and stakeholders, and map their existing sustainability initiatives to the most strategic SDG targets, engage to build stronger relationships with the important stakeholders around the goals, and identify opportunities and strategies to take advantage of this global effort leading to 2030.

ESG Issue Management

Globally, the investors and key stakeholders are increasingly evaluating corporate leadership based on their ability to understand, respond and lead on most critical issues facing the enterprise. They expect the senior management to identify, assess and demonstrate implementation of effective solutions to achieve positive outcomes, including risk mitigation.


Globally, the investors and key stakeholders are increasingly evaluating corporate leadership based on their ability to understand, respond and lead on most critical issues facing the enterprise. They expect the senior management to identify, assess and demonstrate implementation of effective solutions to achieve positive outcomes, including risk mitigation.


As a result, ESG risk and opportunity management have become an essential part of corporate management best practices and the core responsibility of the boardroom and C-Suite.

Why is Issue Management important?Issue Matrix

Effective issue management is central to the ability of a company to recognize, assess and address risks and seize the opportunity as part of the overall corporate risk management process. Many of the issues to be addressed involve specific elements of ESG strategies and performance — the “E,” “S” and “G” concerns of internal and external stakeholders — employees, shareholders, customers, investors, lenders, business partners, regulators, NGOs, and others.

Issue Matrix

An issue matrix is the mapping of critical issues trajectories, relevant intelligence, suggestions for actions, and identification of opportunities to exert leadership on key issues of importance to the organization.

ESG Risk Magnitude and likelihood Assessment

Any assessment of ESG risk needs to consider its magnitude and likelihood. Not all risks are realized by a business, and those that are will be realized in different ways and over different time horizons. For example, operational and regulatory risks may be realized as increased costs. Other risks, such as reputational and marketing risks, may be realized as a loss in business value or market capitalization. Risks such as a business disruption may be realized by an immediate loss in revenue. All of these different types of risk, when monetized and added to current costs, are a proxy for the full value of ESG risk to a business.


Download

Get Full-Version