The ISO Show #187 How To Utilise ISO Compliance for ESG Reporting
ESG is a very broad topic to try and address for any organisation, leaving many scratching their heads on where to start with ESG reporting.
Currently, there is no official certification for ESG, however there are a number of schemes that will give you either a score or rating for your level of compliance against their requirements.
For those currently working towards one of these schemes, you may already have a solid foundation in place if you’re certified to one or many ISO Standards.
In this episode, Ian Battersby and Ali Henshaw discuss ESG compliance and how elements of an ISO Management system can help with ESG reporting.
You’ll learn
· What is ESG?
· Is ESG reporting required?
· Is ESG a nice to have or good solid business practice?
· Is ESG certifiable?
· How can ISO Standards help to address the 3 pillars of ESG?
· How ESG compliance helps to combat Greenwashing
Resources
In this episode, we talk about:
[00:30] Join the isologyhub – To get access to a suite of ISO related tools, training and templates. Simply head on over to isologyhub.com to either sign-up or book a demo.
[02:00] Episode summary: Ian and Ali will be discussing how ISO Standards can help with ESG reporting.
[02:20] What is ESG? – ESG stands for Environmental, Social, and Governance. Analysis and evaluation against these three elements help organisations to consider different areas within their overall sustainability profile.
The Environmental section looks at issues surrounding climate change and actions to address an organisation’s environmental responsibility. This includes monitoring and management of your energy consumption, waste management and pollution. It also seeks to tackle how organisations can address, reduce and mitigate their overall environmental impact.
The Social aspect is based around the relationships an organisation has with its stakeholders. This is focused on employees and looks at a broad range of topics including employee wellbeing, fair and competitive pay, benefits and human resource related policies. Considerations can also include wider business relationships such as supplier relations, local community and government work.
[05:00] The pillars of ESG aren’t silos – You shouldn’t approach each pillar of ESG in isolation, as they cross over in a lot of areas.
For example, in environmental management you may manage hazardous substances, you’ll have a duty to ensure those substances don’t pollute the surrounding area or bodies of water. However, you will also need to consider the health and safety aspect of storing and working with that material. So already you have 1 issue that crosses both the Environmental and Social pillar of ESG.
[05:50] What does the Governance pillar cover? – Governance criteria focuses on creating a business environment that is fair, transparent, and accountable. Considerations in this area include board composition, fairness in pay structures and executive compensation, business ethics and risk management.
[07:05] What types of ESG reporting are required? – For small organisations, there is currently no set requirement as it stands, but you many encounter stakeholder or customer requirements that encourage ESG reporting on some level.
For larger organisations at certain sizes there are mandatory reporting frameworks that you will be required to fulfill. At the moment it’s quite sector specific but this is a trend that will only increase over time.
Like with anything new, this is likely to trickle down to smaller organisations over time, however there will likely be funding and grants available to assist when that time comes.
[08:25] Is ESG a nice to have or good solid business practice? If you want to be a sustainable business, with good legacy that has the ability to grow and develop, ESG is a fantastic tool.
Investors are now looking for sustainable businesses, it’s become a market trend for an ever increasingly environmentally conscious consumer base. You either need to move with the times of get left behind, and sustainability is one key factor that will determine which of those categories you fall into.
[09:50] Which ISO Standards can support ESG?: From a holistic point of view, the structure of ISO standards, the plan do check Act (PDCA) cycle, the need for monitoring and measurement and the need for improvement supports the principles of ESG in terms of quantifiable results.
The additional aspect of having set objectives and proof of tangible improvement actions was something that fulfilled CSR (Corporate Social Responsibility), which in turn has been superseded by ESG.
ISO Standards high-level structure and life cycle approach lend themselves to support various aspects of ESG, depending on the Standard you implement.
ISO 14001 for example, would support the environmental pillar, as it looks at your significant aspects and impacts in addition to that of your supply chain. You’ll need to factor these into your objectives and overall business strategy.
ISO 45001 would tackle elements of the social pillar as it directly addresses the well-being of your employees. It also includes a clause for the consultation and participation of workers, so work directly with employees to identify and address risks that may be missed by management.
[13:40] Is there a certifiable Standard for ESG?: Not currently, but an ISO guidance document is in the works.
Standards that address core elements of ESG include ISO 26000 (Social Accountability) and ISO 20400 (Sustainable Procurement). Again, these aren’t certifiable, but provide invaluable guidance.
Guidance documents have the advantage of being selective in what elements you decide to adopt. The ESG one in development is a good example, ESG as a topic is huge, a smaller organisation may not realistically be able to implement all of the advice.
But, it can be used as a starting point for a materiality assessment that will allow you to be selective of the core subjects you apply to your business.
The idea of guidance documents is not to be a bolt on, as those quickly get forgotten. It’s all about embedding their elements into existing processes.
[17:10] Utilising elements of ISO Implementation for ESG reporting: If you’ve already got an ISO Management System in place, i.e. ISO 14001 or ISO 45001, then you’ll already have objectives, processes and monitoring & measurement in place to address those elements.
ISO 26000 is another good example as it covers a wide range of topics, including human rights, labour practices, the environment, community involvement and development, consumer issues and fair operating practices. Some may not be applicable to you, but as mentioned, it’s a guidance document so you have the freedom to be selective about the aspects you incorporate into your management system.
You need to decide what really applies to you. It’s better to prioritise and take 10 steps on one subject vs 1 on 10 subjects.
[20:25] ESG isn’t a once a year activity: There’s no tick box exercise that you can do once a year and claim compliance, ESG is an on-going endeavor for as long as your business is running. It’s a way of operating, much like ISO Standards. It will develop and grow with your business.
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[23:36] Will elements of ESG become certifiable down the line? We’ll never say never! It’s still very much a developing field. There is currently a framework being developed by the International Standards Organisation, it’s currently in draft form.
Ali herself is on the commenting committee for it’s development, and can confirm that the framework is looking at the links between certifiable Standards and the tangible application.
ISO Standards require third-party verification of your claims before getting certified. In that aspect, they’re the perfect tool to provide tangible proof that you are doing what you say you’re doing, but only in select aspects.
ESG is broad, almost too broad to certify. It’s not really feasible for one person to come in and assess a whole business like they would do for an ISO Assessment, there’s simply too much to cover!
[25:00] The trouble with ESG verification: Currently, a lot of voluntary schemes require you to report against and fulfill, but they are very sector specific because a general one would be too broad and likely will not cover every aspect appliable to every business.
Schemes out there are doing something to battle greenwashing, as the environmental aspects are easier to verify, however social aspects are a lot more tricky and can get even more complicated outside of the UK where there is no HSE annual reporting available.
[26:20] How can you support the Social aspect of ESG?: Measuring your social value can difficult, many think of education as the solution. Here are some ideas to consider:
· Working with local schools – Improvement projects driven by Student run business studies
· Work experience
· Charitable work – allow staff to have a charity day as part of a benefits package
[28:10] How can we prevent the greenwashing of ESG compliance?: Government Bodies are working to tackle this. It’s being built into legislation to prevent greenwashing in future where self-policing hasn’t gone far enough.
Trade Associations are also pushing their members towards more legitimate frameworks to ensure they do remain accountable and transparent about their activities in relation to ESG compliance.
[30:00] What resources do Blackmores have to help? We’ve developed an ESG Gap Analysis, based on the guidance provided in ISO 26000 Social Accountability.
This ESG Gap Analysis will highlight where you’re already compliant and where there is work to be done.
You may be surprised to see that you’re more compliant that you think! Especially if you’re certified to one or many ISO Standards.
We also have a Materiality Assessment, which will help you to determine which topics are of importance to your business and your stakeholders.
You can take the findings from both to help develop your ESG Strategy. If you’re not mandated to do any reporting, you can leave it at that. However, you may want to consider sector specific frameworks to get ahead of the curve for when elements of ESG do become mandated down the line.
[36:00] Where should you start with tackling ESG using ISO Standards? If you’re certified to one or many ISO Standards, then you will have processes in place that can support an ESG initiative program strategy, and you can make it as big or as small as you want.
Start by looking at your environmental, social and governments impacts and work to embed ESG into your existing ISO Management System before they become mandated by stakeholders and legislation – being ahead also feeds into the principles behind social responsibility.
You're embedding a culture, and it becomes a norm which can be developed further. Then, when legislation or customer requirements come in, you’re already prepared to answer.
Also, with ESG there is a focus on people and you can't have a successful business without good people. ESG isn’t only attractive to your customers, but also to potential employees who will want to work for ethical, sustainable businesses. If you aren’t keeping up and fulfilling that, you will struggle to find new talent.
It also goes without saying that being ESG compliant will attract consumers. Greenwashing, as frustrating as it is, exists for a reason - because people want businesses to be sustainable. People wouldn't lie about it if it wasn't important to someone, so stand out by beating the greenwashing allegations and take the right steps towards tacking ESG.
If you’d like to book a demo for the isologyhub, or would like help with an ESG Gap Analysis, simply contact us and we’d be happy to give you a tour.
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