5 min read

What Does The E In ESG Mean?

By Lottie Wright on 23/05/23 11:26

As issues such as climate change threaten our planet, organisations are becoming increasingly aware of the damage they can have on the environment, and the efforts that must be taken to diminish these environmental impacts.

Managing environmental factors has become a core component of companies’ endeavours in investing more into Environmental, Social, Governance (ESG), its risks and its opportunities. 

ESG is a framework for doing ethical business, and understanding the ‘E’ in ESG means understanding how businesses interact with the environment, and what can be done to protect it.

What Does The ‘E’ Stand For?

In short, the ‘E’ in ESG stands for the environment. It takes into account how a company uses natural resources, the impact that its operations have on the environment and how that affects the communities it operates in. 

When assessing how organisations manage the ‘E’, investors, shareholders and stakeholders may consider three overarching environmental factors:

  • Climate and carbon
  • Pollution and waste
  • Natural resources

The ‘E’ in ESG can be difficult to unpack because ‘environmental’ encompasses every aspect of the natural world around us. Moreover, environmental issues are a global problem, and often connect to one another. 

Why Is The ‘E’ So Important?

The ‘E’ of ESG is often given the most focus by organisations, and for good reason. Not only because of how it impacts the very world we live in, but also because environmental issues pose a great threat to businesses. That being said, the ‘S’ and ‘G’ play an incredibly important role within an organisation, and they should not be forgotten or left behind.

Climate change is one of the most significant challenges facing humanity, and because of the likely impact it will have on every aspect of our lives it is greatly emphasised when assessing ESG factors. 

Not only that, but the regulatory changes that will be required to combat climate change mean that organisations will have to be on top of planning and reacting for these necessary policy changes made by governments. 

In this way, how a company contributes to environmental issues, from greenhouse gas emissions, carbon footprint, resource usage, waste policies and energy needs are under great scrutiny, and these aspects are all taken into consideration when tracking an organisation’s sustainability practices. 

Consumers, investors, shareholders and communities are beginning to exert pressure on organisations to demonstrate responsible, sustainable practices, by disclosing their environmental efforts and impacts. 

People are more knowledgeable about sustainability and their own impact on the climate than ever before, and so they are expecting more from the companies, organisations and businesses they engage with.

What Can Your Organisation Do?

By not considering the impact of their businesses on the environment, companies are leaving themselves open to potential criminal prosecution, regulatory sanctions and reputational damage. All of this can have a hugely detrimental impact on the value and image of a company.

Being proactive about environmental concerns, anticipating problems and mitigating potential environmental risk gives businesses an advantage as rules and regulations change, as well as increasing autonomy and reducing chances for costly violations and financial risk. 

Organisations should consider undertaking their own climate risk management, exploring how their organisation might be able to combat the climate crisis. Carbon emission plans and targets are an effective way to plot your waste and emission output, and can also help to investigate carbon footprint across the product life cycle. 

Organisations could look at investing in clean tech to reduce energy consumption, and increasing the use of resources from renewable sources. 

It is also important to understand how natural resources are used across operations, with specific considerations on issues like water scarcity, land use and biodiversity, and raw material sourcing. 

Coming up with a comprehensive sustainability action plan for your organisation is vital, and ESG reports are a key way that you can achieve this.

ESG reports evaluate your organisation's ESG strategy to determine what is effective and what needs improvement, and this information can then be used to better your organisation’s practices and create long term ESG goals. 

However the process of reporting, data collecting and performance tracking for ESG can be time consuming, and this valuable time could instead be spent developing your plans in order to achieve global sustainability.

This is where Convene ESG comes in.

How Convene Can Help

At Convene, our ESG expertise has helped us develop our new reporting tool Convene ESG, to help streamline your ESG report building process.

Our end-to-end approach simplifies and automates much of the process, and will help your organisation not only generate a report, but be able set up and track your ESG goals. 

Our peer comparison feature also allows you to see which disclosure items your peers have reported on, as well as the best-practice recommendations for your industry.

With Convene ESG, you can be sure that your ESG report building runs smoothly, so you can instead focus on developing your environmental practices. 

You can learn more about how Convene ESG can help your organisation in meeting ESG requirements here, or book a free demo today.

Lottie Wright

Written by Lottie Wright

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