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ESG and Sustainability

Build Business and Mitigate Risk by Integrating ESG Throughout Your Organization

On Feb. 24, 2022, the FiscalNote Executive Institute and Equilibrium co-hosted a virtual discussion, “Build Business and Mitigate Risk by Integrating ESG Throughout Your Organization,” with Jennifer Koenig, Vice President of Environmental, Social and Governance at Stericycle; Sonay Aykan, Associate Director of ESG & Sustainability at Colgate-Palmolive; Omar Ben Halim, Director of Albright Stonebridge Group’s Sustainability Practice; and Frank Meehan, CEO of Equilibrium. Moderated by FiscalNote Executive Institute Chairman Dave Curran, Co-Chair of the Sustainability and Environmental, Social and Governance Advisory Practice at Paul, Weiss, Rifkind, Wharton & Garrison LLP, the program focused on how to develop a team approach to ESG.

Key takeaways:

Creating New Positions in the C-suite Leadership to Support ESG

  • Companies are creating executive-level positions to develop and oversee their ESG strategies.
  • These ESG positions are evolving, even in large companies that began their ESG journeys five years ago or more.
  • The market is evolving, with law firms, accounting firms, and other consultancy groups helping companies embed sustainability and ESG into their broader business strategy.

Navigating Heightened Regulation and Government Scrutiny  

  • U.S. and global regulators are rolling out multiple new frameworks. The Financial Stability Board’s Task Force on Climate-Related Financial Disclosures and the European Union’s proposed Corporate Sustainability Reporting Directive have laid out disclosure requirements, some of which are overlapping. Companies are awaiting promised guidance from the SEC to see how it maps to the others.  
  • Companies are reluctant to act until they have a clear regulatory directive.
  • Assess where things stand today and pressure-test the data you receive to be prepared once regulatory requirements are adopted.
  • Understand the different standards in each country, which can vary significantly, and roll up country-by-country data to show the global picture. This method is more effective than reporting based on a single jurisdiction’s standard.

Breaking Down Organizational Silos 

  • Reach out to people in critical positions throughout the company to get to know them and understand their processes.
  • Put governance processes in place at a corporate level to ensure your disclosures are aligned.
  • Form good relations with companies in the supply chain and encourage them to become partners in meeting your ESG goals. Asking how much greenhouse gas emissions they are emitting can be an excellent place to start the conversation about reductions.

Pressure-Testing Data

  • Work with people throughout the company to ensure they collect the data you need, which may involve creating new data sets.
  • Understand the scope of the data being collected, what it covers, to make sure it can withstand scrutiny. 
  • Consolidate and standardize data throughout the organization. 
  • When gathering information from suppliers, help them figure out what data they need to report and make it easy for them to provide it to you so you can more effectively analyze it.
  • Balance the competing interests of getting perfect data and getting sound enough data to mitigate legal or other risks. Use this data to develop and execute a strategic ESG plan.

Tailoring Your ESG Plan

  • Back up far-reaching pronouncements by the executive team with a strategic plan. Take a step back and understand where the company should be and how to get there.
  • Conduct a materiality assessment to understand what your investors and customers expect from you. Report on the measures that tie to those activities, which will be specific to your business. 
  • Companies are re-evaluating what data is considered material in their reporting to include ESG data and not just financial data. 
  • Look to outside organizations such as the UN Climate Change Clean Development Mechanism for methodologies on reducing greenhouse gases in different sectors.

Tracking Progress Against Peer Companies

  • Use technology to help compare otherwise disparate data between companies. For example, revenues generated multi-nationally do not correspond directly to U.S-generated revenues. Calibrate the data to make an accurate comparison between companies.
  • Look at your competitors’ ESG goals and challenge your company to set more aggressive targets.
  • Turn the lights off instead of calculating the emissions of the lightbulb. In other words, tracking the data is important, but look for simple solutions for saving energy.

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