INGENIEUR
REPORT
INGENIEUR
Getting Started with ESG
By Lee Soo Leng
REPORT
The Global ESG Monitor ( GEM ), a research initiative that examines ESG transparency in non-financial reporting of the largest companies in the world , revealed that Malaysian companies used internationally recognised frameworks , standards , and strategic tools in their Environmental , Social and Governance ( ESG ) reporting but lacked the appropriate content and level of detail needed for optimal transparency , thus ranking them in the midfield amongst global and regional peers .
Benefits of a strong ESG programme in companies
Some key benefits of implementing ESG programmes in companies are :
● Improved transparency and trust By disclosing detailed information about their ESG performance , companies demonstrate commitment to transparency , which helps build stakeholder trust . This can be particularly important in the modern business environment where investors , customers , partners , employees , and others increasingly demand sustainable and ethical corporate behaviour .
● Decreased costs A strong ESG programme can decrease expenses . Examples include lower costs in operations , e . g ., energy , water , materials , and waste ; in human resources ( HR ), e . g ., higher productivity and easier talent attraction , avoiding non-compliance penalties , more accessible access to capital , etc .
● Stronger competitive advantage Investors are likelier to invest in companies that disclose their ESG performance . Partners and customers are increasingly looking for responsible companies to do business with . Employees want to work for and stay with companies committed to building a positive impact on people and planet .
● Better risk management Preparing ESG programmes will help companies identify and manage potential risks and opportunities . For example , a company that discloses information about its carbon emissions may be able to identify opportunities to reduce those emissions , mitigate the associated risks , and lower costs .
Start with Materiality Report
All ESG reporting and changes start with the understanding of the concept of materiality . As explained , stakeholders and investors are inquiring about companies ’ dedication to sustainability initiatives and other activities that fall under the ESG umbrella . It ’ s essential to have answers to these questions .
A materiality assessment provides a guide or blueprint for an organisation ’ s ESG strategy . It empowers companies to easily report on the current state and outline future initiatives while considering business goals and risks . Companies use the concept of materiality to guide their sustainability strategic planning processes . There is no one way to conduct a materiality assessment . Many companies rely on external consultants to help them , while other companies with more robust sustainability teams manage the process themselves .
Generally , the process for conducting a materiality assessment includes the following steps :
1 . Identify and categorise the key issues . In this phase , the company should develop a long list of issues . The various problems
60 VOL 97 JANUARY - MARCH 2024