Regulatory Compliance
Companies are contending with an ever-increasing array of regulatory compliance requirements at the regional, national, and local levels, with a steady stream of new legislation and policy being introduced constantly. Whereas ESG requirements were once focused on the largest companies, small and medium-size businesses are also increasingly subject to compliance measures, especially with the greater focus on transparency in the supply chain. Organizations must be vigilant and rigorous in their regulatory analysis and reporting in order to maintain compliance and mitigate the risks of sustainability and ESG governance.
Disclosures
The rising tide of government and financial regulations, including CSRD, ISSB, and SFDR, to name just a few, is requiring organizations to produce disclosures at an increasing volume, with the goal of promoting transparency and accountability for environmental initiatives and reporting. The disclosure process involves a multi-step process of data collection and analysis, materiality assessment, process definition, documentation, validation, quality control, and reporting – all under the scrutiny of regulatory agencies and stakeholders. Disclosures are becoming more complex all the time, requiring a rigorous framework to ensure data integrity and a high level of accuracy in reporting.
Materiality Assessments
Materiality assessments encompass two companion concepts: Materiality, which assesses the significance of ESG issues for a company and its stakeholders, with a focus on the impacts of a company’s activities on external factors, and Double Materiality, which recognizes that sustainability issues can have material consequences for both the organization and the external environment. Materiality assessments are utilized to identify and prioritize the most relevant and impactful issues to address in terms of regulatory compliance, stakeholder interests, and community relations, in addition to highlighting key priorities for internal decision-makers, for purposes of reporting, target setting, and strategic planning.
Industry Benchmarking
Benchmarking provides a foundational basis for target setting, metrics and analytics, prioritization and decision making, and ongoing assessment of progress and outcomes. Using effective industry benchmarks, organizations can better understand their competitive position when it comes to ESG initiatives, align their strategic goals in the context of industry standards and best practices, and assess their market position in the eyes of key stakeholders including customers, suppliers, employees, and regulatory bodies. Benchmarking can clearly identify areas for greatest improvement and help companies position themselves most effectively in terms of ESG reporting, stakeholder engagement, and internal strategic planning.
Surveys and Focus Groups
Surveys and focus groups provide the necessary quantitative and qualitative insights to reveal key ESG stakeholder priorities, perceptions, attitudes, and behavioral patterns. Utilizing this primary research as a baseline, sustainability initiatives can be optimized for maximum impact in terms of product/market fit, pricing, investment priorities, competitive advantage, profitability, and public perception. Longitudinal time-series analysis, in particular, may be used to identify emerging stakeholder trends early and enable organizations to act quickly as perceptions and priorities change. This intelligence also provides objective, compelling proof points and data that are highly useful for sustainability reports and other communications.