ESG compliance: why use an outsourced consultant?

Do you want to comply with ESG (environmental, social and governance) criteria? Structuring your ESG strategy? Optimize your practices? Whatever your project, calling on an outsourced consultant is a very beneficial decision, ideal for securing your approach.

But what exactly does ESG compliance mean? When to outsource this project to a consultant? And what are the levers to activate to achieve environmental, social and governance compliance? WAYDEN gives you all its advice.

 

What are ESG criteria?

Environmental, Social and Governance (ESG) criteria are extra-financial indicators used to assess a company’s performance in terms of sustainability and social responsibility (CSR).

A distinction is made between:

• Environmental criteria, relating to the company’s impact on the planet, whether direct or indirect:
  • Energy and water consumption;
  • Waste and recycling management;
  • Respect for biodiversity;
  • Prevention and control of environmental risks;
  • Climate strategy and carbon footprint;
  • Greenhouse gas emissions;
  • Energy transition;
  • …

• Social criteria, relating to human relations within the company and with its ecosystem:
  • Respect for human rights and labour rights;
  • Working conditions of employees;
  • Prevention of occupational accidents;
  • Gender equality and diversity;
  • Respect for social dialogue;
  • Training and skills development of employees;
  • Involvement in the local community;
  • …

• Governance criteria, which assess how well the company is managed and controlled:
  • Composition and independence of the Board of Directors;
  • Business ethics and anti-corruption;
  • Financial and non-financial transparency;
  • Executive compensation;
  • Management of conflicts of interest;
  • Existence of ESG committees or CSR committees;
  • …

 

What does ESG compliance involve?

ESG compliance aims to ensure that internal practices comply with regulatory requirements environmental, social and governance criteria. This process is subject to a structured process, designed to align internal actions and policies with internal benchmarks, standards, legal frameworks and voluntary commitments. Such compliance can therefore include several actions, which will vary according to the organization’s sector of activity, its issues, needs, priorities and the maturity of its sustainable development approach.

Here are some examples of measures that can be deployed as part of ESG compliance:

• Reduction of the carbon footprint;
• Implementation of an inclusion and diversity policy;
• Compliance with the Corporate Sustainability Reporting Directive (CSRD);
• Selection of responsible suppliers;
• Publication of an extra-financial report in accordance with the standards in force;
• Integration of ESG criteria into corporate governance;
• Training and raising awareness of teams on climate, social and ethical issues;
• Implementation and monitoring of ESG performance indicators;
• Development of a gender equality policy;
• …

Regulatory compliance is also intended to reduce non-financial risks and improve the company’s performance, to enhance its brand image as well as its employer brand. It also reduces costs and meets the expectations of investors and stakeholders in terms of sustainability, traceability, ecology and societal commitment.

 

ESG compliance: why hire an external consultant?

It may be wise to call on an external consultant for ESG compliance at several key moments, in particular before the adoption of a new regulation (CSRD, European Green Taxonomy, SFDR – Sustainable Finance Disclosure Regulation, etc.), upstream of a transformation project (merger, fundraising, international development, etc.), or to secure the publication of its non-financial reports and the reliability of the data communicated. The ESG consultant can also intervene to carry out an initial diagnosis or a maturity audit, in order to evaluate current practices and identify corrective actions.

Thanks to his many years of career, his strategic vision and his cutting-edge expertise, the consultant quickly understands your specific challenges. He has a perfect command of the regulations in force, as well as the current standards and standards. With With his or her many human and managerial qualities, he or she structures the approach around a structured methodology, identifies high-impact actions and helps you save time and secure your approach.

His external and objective view allows him to highlight the gaps as well as the good practices to be deployed and the levers of improvement to be activated to achieve your objectives, around an action plan adapted to your constraints and your means.

Another great strength of a consultant during ESG compliance is his ability to support change management : he facilitates team buy-in, their training and federates all employees around an environmental, social and governance strategy.

How to achieve ESG compliance?

Any ESG compliance project must be rigorously framed and broken down into several key steps:

1. Carry out an ESG diagnosis

First of all, it is imperative to carry out an initial inventory of the situation to analyze the organization’s current ESG strategy. This preliminary diagnosis makes it possible to assess existing practices, deviations from regulatory obligations, as well as the maturity of the company’s ESG commitments.

Are your ESG indicators clearly defined? Does your governance fully integrate social and environmental issues into its strategic decisions? Is your CSR policy well understood and supported by all your teams? Are your non-financial reports carried out in a reliable and transparent manner? These are all questions that should be asked during this first step, in order to identify the flaws and the corrective areas to be deployed.

2. Define a tailor-made action plan

In the light of the lessons learned from this diagnosis, it will then be necessary to define a clear roadmap, a realistic and structured approach designed to set concrete, quantified and hierarchical objectives. This action plan must be in line with the company’s strategic challenges and adapted to its short, medium and long-term priorities.

3. Implement ESG governance

The implementation of ESG governance can take several forms: appointment of an ESG referent or a dedicated committee; integration of ESG criteria into decision-making processes; training of employees in environmental, social and governance issues…

4. Implement performance indicators

To analyse the success of ESG compliance over the long term, it is also essential to set up ESG performance monitoring indicators : carbon footprint, waste production, recycling rate, gender pay gap, diversity rate, absenteeism and turnover rate, etc.

These KPIs will need to be analyzed regularly, in order to monitor progress, identify bottlenecks, and optimize the compliance process.

5. Integrate the ESG strategy into a continuous improvement approach

To ensure the proper compliance of your ESG policy in a sustainable way, it is essential to implement a continuous improvement approach. This involves, in particular, the regular evaluation of your practices, the updating of your performance indicators and the analysis of any discrepancies between your objectives and your results. In addition, it is imperative to Carry out regulatory monitoring and to listen to your stakeholders (customers, candidates, investors, suppliers, business partners, etc.) in order to stay abreast of changes in market expectations. It will then be necessary to implement appropriate corrective actions in order to continuously optimize your ESG strategy.