What is ESG?
ESG is a holistic concept and a set of criteria about an organisation’s ability to create and sustain long-term value in a rapidly changing world and managing the risks and opportunities associated with these changes. Environmental criteria considers how an organization performs as a steward of nature such as strategy towards climate change, water management, air and water pollution, land usage etc. Social criteria examines how companies manage relationships with various stakeholders such as employees, suppliers, customers and the communities where it operates. It may include considerations such as customer satisfaction, data protection and privacy, diversity and inclusion, human rights etc. Governance deals with a company’s leadership, executive pay, audits, internal controls, shareholder rights, training and awareness regarding bribery and corruption etc.
IMPORTANCE OF ESG:
ESG is used as a framework to assess how an organization manages risks and opportunities that changing market and non-market conditions create. ESG also puts a heavy emphasis on risk management, because monitoring and mitigating risks across all three dimensions (i.e. environmental, social and governance) is an important priority for any company that is serious about ESG. Sustainable development is a continuous process. Sustainability reports are produced for internal as well as external stakeholders. Internally, management considers this reporting to be a benchmark for performance related to environmental and social impact. External stakeholders are interested to learn more about the organisation’s socially responsible behavior. ESG is likely to play a bigger role in how companies are assessed, not only by investors but by consumers and other stakeholders.
How can BDO help:
BDO Risk Advisory Services team possesses experience and expertise in ESG reporting and risk management which allow us to support you with a broad range of ESG services that can be tailored to meet your needs. Our support covers the following areas:
- ESG governance and reporting
Our ESG professionals can help review your ESG reporting processes including materiality assessment, data collection and compilation, methods of reporting and disclosure mechanism in fulfilling current reporting requirements or adoption of international reporting standards such as GRI. With our extensive knowledge in ESG reporting accumulated from our ESG Reporting Performance Surveys, we can benchmark your company's reporting with latest industrial practices and make recommendations to enhance your reporting transparency. Our ESG governance and reporting services also cover:
- ESG governance review
- ESG risk management review
- Stakeholder engagement
- Target setting of environmental and social KPIs
- Board awareness training on ESG
- Mapping and integrating UN Sustainable Development Goals (SDG) into strategy
- Climate-related services
Our professionals can help you to understand how your business operations may be exposed to climate-related physical risks and the potential impact of regulatory and economic under the transition to a low-carbon economy. We can help develop comprehensive response that address risks and seize opportunities along the transition pathway. Our climate-related services also cover:
- Greenhouse gas management
- Mapping climate-related risks
- Climate resilience business strategy advisory
- Climate change risk assessment
- Verification of carbon footprint
- Supply chain risk management and audit
When a supply chain is disrupted, the company is at risk of failing to meet production or delivery commitments it has made to its customers. The Reporting Guide requires listed companies to identify and mitigate ESG risks along the supply chain. These risks may relate to trade ethics, corruption, child labour, carbon or water footprint, human rights violation, environmental breach, contract management, data protection, etc. Our professionals can help manage your supply chain risks by providing a risk-based, systematic supply chain due diligence and making practical recommendations.
- Independent assurance on ESG report
Independent assurance can enhance the credibility of the ESG information disclosed by a company and the quality of the company’s ESG reporting. It can provide investors with more reliable data for analysis. The Reporting Guide recommends that listed companies may seek independent assurance on their ESG reports. We can help provide an independent assurance on your ESG report including certain ESG data, content of the report, compliance with international reporting frameworks, etc.