Why should companies be interested in their ESG maturity?
It has become acutely clear to business leaders that to operate in today’s commercial environment an overarching ESG strategy isn’t just a good idea, it’s an imperative. There was a time when the only stakeholders of any real importance were those who held shares, and for the most part their interests were pecuniary in nature. Keep this powerful group content with growth, increased shareholder value and good dividends, and most other groups could (and often were) ignored or quietly placated.
This however is no longer the case and without strong ESG credentials companies risk sanction from regulators and policymakers; will struggle to recruit and retain the brightest and the best staff; risk higher cost of credit; are at risk from activists and public boycotts of services and products and will even find themselves at a disadvantage when it comes to something as seemingly unrelated to ESG as raising capital.
The modern reality is that all stakeholder concerns must be taken seriously, whether they stem from members of staff, regulators, legislators and government, or the public. Mapping these concerns against the impact they have on the business is the key that can unlock and align all these very disparate interests.
ESG Maturity Assessment by BoardClic – how does it work?
At BoardClic we have seen a corresponding increase in demand from our clients to understand how their Board and leadership teams are dealing with their individual ESG challenges. Pressure is rising, from regulators, lawmakers, as well as customers, partners, employees, and investors, which is why we have created our new ESG Maturity Assessment within the existing BoardClic platform. It gives clients a quick and effective way to assess the maturity and alignment on ESG with their Board and C-suite team, as well as helping to future proof ESG governance.
The new tool has been developed for boards to evaluate their common view of their company’s sustainability work in the areas that are considered (by our experts) to be the basis for good ESG practice. The aim of the module is to quickly evaluate the level of ESG maturity and consensus, and then identify areas in need of development at board level. As a result of this exploration companies will be able to see discrepancies and deviations on ESG understanding between the board, management, and/or other stakeholder groups.
To begin with, all companies in all sectors and of all sizes will be evaluated against the same baseline, with the data generated being used to develop a sustainability index for boards, allowing them a better view of which areas they are strong, and where they need to invest resources to develop on ESG issues.
What value ESG Maturity will bring to BoardClic clients?
The ESG Maturity Assessment will cover the six areas that our in-house ESG expert Camilla Backström considers the most essential in a modern company. The questions in the Assessment is based on key ESG frameworks as well as years of practical experience – the categories in our ESG Assessment are:
- Purpose and governance
- Materiality & Stakeholder engagement
- Climate governance
- Social, diversity and inclusion
ESG is an area that is developing incredibly fast. The questions in the BoardClic ESG Assessment may therefore change over time to cover new categories and relevant topics.
ESG Maturity is designed to inspire action and commitment and is primarily aimed at board members and chairs but can also help CEOs and senior executives to map aspects of the company’s strategic ESG maturity and blind spots. Internal sustainability experts can also benefit from this evaluation.
The major benefit for companies that are interested in improving and consolidating their expertise on ESG is in aiding their long-term sustainability, perhaps even survival, by giving boards the ability to verify their view of a company’s sustainability work and identify strengths and weaknesses. It’s all very well to believe you have things right, however ESG Maturity gives boards the opportunity to get a more objective, data-driven view of how a company is performing on ESG.
Another benefit of an ESG Maturity Assessment comes when there are fragmented views within a board. In such a situation the results from an evaluation become a tool to create and improve alignment throughout a board. The findings from an evaluation also enable individual members to set goals to develop their understanding of sustainability, making them better able to steer their company in the right direction. They will also be able to use evaluations to compare their organisation with similar companies.
Why is having a strong well aligned position on ESG more important now than ever before?
The biggest motivation today for developing ESG Maturity is that in almost every aspect of modern corporate life companies with a robust ESG strategy are commercially more successful. They also have better access to talent, are more popular with customers, and come into less conflict with regulators, legislators, and other official bodies.
Already, regulatory requirements on ESG compliance for different types of listed companies in various regions are increasingly being codified, thus requiring boards to make greater efforts to show they are serious about ESG and prepared to be transparent. Demands on asset managers are also increasing with increased emphasis on green taxonomy.
However, the most important thing is not the regulation itself, but the increasing demand from customers, business partners and staff for companies to demonstrate their understanding of their most relevant ESG topics and how they are managed. In the past ESG has been treated with low priority, and one of the reasons for this is that boards often say they don’t feel qualified or competent to tackle the issues it throws up.
BoardClic ESG Maturity evaluation is an effective way for boards to quickly get started with this vital work in a smart and cost-effective way.
Would you like an introduction to our new tool and see how it can help you take your ESG governance to the next level? Book a personal consultation here.