A roadmap to managing environmental, social, and governance demands

Table of Contents

• What is ESG?
• Why care about ESG?
• Advantages of a sustainable business model
• Why ESG reporting is critical
• How MNP can help

The business landscape is changing at a breakneck pace. Stakeholders are increasingly concerned about the consequences of their consumer, investment, and employment decisions. As people understand more about their place in an interconnected world, the demand for your organization to act in a more responsible, equitable and sustainable way is becoming ever louder. But how do you do that in a meaningful way that still makes for profitable and innovative business decisions?

What is ESG?

Environmental, social, and governance (ESG) are the three pillars stakeholders are increasingly using to measure the degree to which your organization is benefitting your community. They are also strategic imperatives to drive long-term, sustainable value in our changing world.

ESG business drivers

Environmental

• Energy efficiency
• Carbon footprint
• Water consumption
• Waste management
• Packaging
• Biodiversity management

Social

• Employee attraction and retention
• Diversity and inclusion
• Pay equity
• Customer data privacy
• Social acceptability of projects / business
• Organizational culture

Governance

• Climate change
• Cyber security
• Corruption and bribery
• Responsible taxes
• Compensation
• Reliable financial disclosure

Why care about ESG?

Organizations are facing increased demands from:

• Investors
• Regulators
• Community stakeholders
• Employees
• Boards of directors

A growing body of evidence is also revealing the long-term, intergenerational benefits of ESG — as well as the risks of not acting now. 

Advantages of a sustainable business model

A growing body of evidence suggests the long-term benefits of ESG initiatives far outweigh the initial costs. Since many of these advantages accumulate as the program matures, the real risk is in delaying getting started.

Increased competitiveness

Create distinct value propositions for clients, partners and consumers — and offer a clear reason to choose your business over a competitor.

Greater resilience

Absorb the costs of socio-environmental changes over your own timeline, rather than face them abruptly when these measures eventually become legal requirements.

Scalability

Realize measurable benefits as you continuously invest in ESG policy and practice maturity.

Resistance to commoditization

Deliver cultural, social, and economic value which extends beyond your product or service offerings.

Sustainability

Escape zero-sum business planning and shift toward more circular, longer-view economic thinking.

Better value for investors and stakeholders

Reduce investor risk and provide a more reliable return on investment.

Reshape value chains

Support network effects which enhance the impact and benefits of ESG efforts as they become more commonplace.

Create surplus

Reduce your dependence on finite resources and increase your ability to do more with less.

Clearer purpose and brand identity

Build strong relationships with employees, customers, investors, and stakeholders who resonate with your values and are loyal to your objectives.

Why ESG reporting is critical

Consider that ESG is really two equally important activities: (1) the sustainability initiatives themselves, and (2) reporting on those activities.

Effective ESG reports are critical to communicate the urgency your organization places on sustainability, as well as quantification and validation of your sustainability efforts. Well formed ESG reports will:

1. Compliment your financial reporting by providing a fuller picture of your value creation potential and enterprise risk landscape.
2. Demonstrate your commitment to driving sustainability and competitive advantage along dimensions of cost leadership, product / service differentiation, and intellectual capital development.
3. Measure and disclose intangible (yet financially material) factors such as strategy, innovation capacity, human capital management, reputation management, commercial risk mitigation, and resource efficiency.
4. Disclose and discuss certain risks, uncertainties, challenges and trends that may affect financial performance.

How MNP can help

No matter where you are on your ESG journey, our team can assess your initiatives and help you move toward maturity.

Financial materiality and alignment

We can help you identify financially material ESG factors which may have a serious impact on your business and ensure they are aligned to your values, stakeholder concerns and societal norms.

Supporting your journey to sustainability

ESG is not a destination, but an iterative and ongoing process which your business must embrace over its entire lifecycle. To realize the advantages requires a commitment to continuously invest in, manage and monitor ESG efforts. 

Sustainability Milestones