How to Conduct ESG Initial Evaluation for Organizations
| Introduction |
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| 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