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How to Conduct ESG Initial Evaluation for Organizations

An initial ESG evaluation is essential for organizations to understand where they stand in terms of sustainability and responsible business practices. Below is a checklist that organizations can use to assess their current state of ESG. The ESG Initial Evaluation will act as a baseline and will help in setting practical targets and goals to improve ESG performance over time.
ESG: Environmental Checklist
– Assess Energy usage and consumption.
– Assess the use of clean energy.
– Evaluate Carbon Footprint across Scopes 1, 2, and 3 emissions.
– Assess greenhouse gas emissions reduction initiatives.
– Assess waste generation, waste reduction initiatives.
– Assess water stewardship efforts, including recycling and reuse.
– Review status of environmental compliances.
– Review pollution prevention measures and environmental management systems.
– Assess impact of business on biodiversity and conservation efforts.
– Assess supply chain sustainability, including supplier environmental performance.
ESG: Social Checklist
– Evaluate employee diversity and inclusion initiatives.
– Review labor practices, including health and safety measures.
– Assess employee well-being initiatives to support mental and physical health.
– Assess community engagement programs and philanthropic activities.
– Monitor supply chain labor standards and ethical adherence.
– Monitor human rights policies and adherence to international standards.
– Assess employee training programs for skill development and career growth.
– Evaluate the customer satisfaction with company products and services.
ESG: Governance Checklist
– Review board composition, diversity and independence.
– Evaluate ethical practices and anti corruption policies.
– Evaluate executive compensation practices.
– Assess risk management and internal controls.
– Ensure transparency in financial reporting and disclosure practices.
– Review stakeholders engagement policy.
– Review status of compliances with relevant laws and regulations.
– Review whistleblower policy for reporting misconduct.
– Evaluate the data privacy and security policy.
ESG Standards
1. GRI (Global Reporting Initiative): Provides a comprehensive framework for sustainability reporting, including environmental, social, and governance indicators.

Limitation: Voluntary reporting, may vary in application across industries.

2. SASB (Sustainability Accounting Standards Board): Provides industry-specific standards for disclosure of financially material ESG factors.

USP: Focuses on financially material ESG issues for investors.
Limitation: Limited coverage of non-financially material ESG factors.

3. TCFD (Task Force on Climate-related Financial Disclosures): Provides recommendations for disclosing climate-related financial risks and opportunities.

USP: Enhances transparency and helps investors understand climate-related risks.
Limitation: May require significant data collection and analysis.

Page Credits: Rajdeep Pandey