ESG strategy and your CSRD reporting in 5 easy steps.

written by

Emma Annies

Establishing sustainability in a company is by no means just about minimizing the ecological footprint or using fewer resources, for example - it requires a holistic ESG strategy. An ESG strategy can reduce risks and expand opportunities in the company, which has a direct impact on business performance and valuation. This article describes the 5 steps to start the ESG strategy.

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ESG strategy and your CSRD reporting in 5 easy steps.

Here's how to start your ESG strategy and CSRD reporting in 5 easy steps.

Establishing sustainability in a company is by no means just about minimizing the ecological footprint or using fewer resources - it requires a holistic ESG strategy. An ESG strategy can reduce risks and expand opportunities in the company, which has a direct impact on corporate performance and valuation. As a result, ESG reporting is no longer a "nice to have" but essential - today, over 95% of S&P 500 companies already publicly report ESG information. However, building and managing a holistic ESG strategy can be challenging, as it cuts across organizations and requires the integration of internal as well as external stakeholders. 

Therefore, five important steps are necessary to successfully integrate an ESG strategy into the company.


1. define your ESG goals

As a first step, clarify the purpose, goals and roles for your ESG strategy. You can start by answering these questions: 

  • Why: What is the purpose of your ESG strategy? Define clear, realistic and relevant goals to stay on track. 
  • Who: Who are the internal and external stakeholders? What role will they play in your ESG strategy? 
  • What: What ESG information do your stakeholders need? What ESG metrics and topics will you report on? 
  • When: When will you share ESG information? You may want to align this with your corporate reporting schedule or external due dates for ESG reporting frameworks. 
  • Where: Where will you publish ESG information? For example, in an annual report, on the website, in a webinar or video. 
  • How: How will you execute your ESG strategy? What will the governance structure look like? How will you prepare and share your ESG reports?

2. prepare properly

  • Program structure: Set up your ESG strategy and governance structure. Define key roles and responsibilities.
  • Stakeholder: Create your stakeholder analysis. Determine what ESG information each stakeholder group needs. Commonly reported ESG information areas include overall strategy, governance, management processes, risks and opportunities, objectives, and performance.
  • Data: Collect preliminary internal ESG data to identify any gaps. Decide how you will fill the gaps. For example, to estimate Scope 3 emissions, you will need to use external resources such as those provided by the GHG Protocol or the Impact Institute.
  • Reporting frameworks: Determine which ESG reporting frameworks and standards are relevant to your organization and which ones you will use. Consider which frameworks best align with your organization's goals and values and the needs of your stakeholders. Some widely used frameworks include the CSRD, EU Taxonomy, GRI, CDP, TCFD, WEF, and others.
  • External awards: Decide whether to seek additional external ratings or awards for ESG principles. Once you have prepared your ESG report, it may not be a big effort to complete the application for these awards.  

 

3. measure and evaluate ESG factors correctly

Materiality assessment: Define materiality (double materiality) by stakeholder. Consider both sides of materiality (outside-in and inside-out) to determine material ESG metrics and issues for your company.  

  • Collect data: collect data through surveys, integrations, data uploads, third party databases. 
  • Assess ESG risks and opportunities: Analyze data to identify ESG risks and opportunities. For example, an ESG risk could be supply chain disruption due to climate change, while an opportunity could be cost reduction or a new product. 
Inside-out and outside-in perspectives



4. act accordingly

  • Set improvement targets: Set realistic, measurable, and actionable goals for the ESG risks and opportunities you identify.  
  • Make the business case: use the insights you have gathered to build the business case. Connect a current weakness to your action plan for improvement. For example, an action plan to reduce greenhouse gas emissions could be to switch to renewable energy sources. This will have more impact if it is also linked to the business benefits of reducing costs and improving brand reputation. 
  • Execute your improvement plans: Put your improvement plans into action. Delegate specific tasks to those responsible. 
  • Track progress over time: Evaluate your progress over time to track improvements. Compare your progress with others in your industry to identify additional areas for improvement. 

 

5. communicate your ESG strategy properly

  • Report the results: Be open, clear and transparent when sharing your results to build trust with your stakeholders. Avoid vague, exaggerated claims and show your commitment to improvement, even if you miss your targets. Here are a few tips: 
  • Be reliable: Demonstrate your commitment through specific, measurable goals. 
  • Let action speak: be honest about what actions you are taking now to achieve these goals and how you plan to achieve them in the future.
  • Get to know your audience: Some stakeholders will need detailed technical information, while others will need an overarching picture of your progress. Make sure you tailor your story and the information reported to each audience. 



How can cubemos help with your ESG strategy? 

Build trust with your key stakeholders through clear targets, automated reporting and transparent benchmarking. Cubemos makes it easy to build and implement your ESG strategy and reporting strategy with a fully integrated, centralized platform. If you have any questions, feel free to contact us.


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