Embed ESG into your existing business structures
The ‘G’ in ESG is critical for operationalizing an ESG strategy and measuring progress towards goals. Although there is an expectation that new roles and responsibilities will be established and new processes created, leadership should strive to integrate ESG into existing structures, functions and processes. Having the right governance structures paves the way to develop an ESG-aware culture within your organization, which can drive efficiencies, increase employee retention, and more.
Effective corporate governance drives accountabilities at various levels of the organization, including the board, executives and management. The goal of ESG governance is to ensure that a company acts responsibly and seeks to support sustainability and equity across its operations.
Existing governance structure… | ...enhanced to embed ESG | |
|---|---|---|
| Components | Key Steps | Consider |
Board Oversight | Align the Board with your overall ESG strategy. Determine how to take on oversight responsibilities. | Should you establish an ad hoc committee? Should you instead absorb accountabilities into existing committees? |
Risk & Compliance | Assess and operationalize ESG risk identification. Account for both ongoing and future risks. | What identification, controls and analysis exist today? Where does ESG introduce gaps? Are all risk pillars (e.g., strategic, reputational, compliance, etc.) covered in your plans? |
Internal Audit | Expand existing processes and controls. Create new ones as demanded by your unique ESG ambitions and strategy. | Are you properly managing and monitoring your ESG commitments? Do your internal processes and controls support your external storytelling and reporting? Are you building stakeholder trust and attracting investors? |
| Data Management & Cyber Security | Incorporate data into the foundation of your ESG program. Align data capabilities to your strategic and regulatory needs. Prioritize material, reliable financial and non-financial data. | Do you have proper data accountability across all organizational functions? What interdependencies exist? Can you ensure data integrity and security across the entire data lifecycle? |
Ethics | Encourage ethical behaviors. Create an ESG-aware culture. Create structures that incentivize and reward these mindsets. | What influences your organization today? How are decision made? Can you realign processes to incentivize desired behaviors? Are you working with like-minded suppliers and partners? |
| Tax Transparency | Align tax with the company’s overall ESG strategy. Build a tax control framework that supports your tax principles and strategy. | Do you have sufficient data to tell the whole story with respect to your global tax footprint? How do you define your “responsible” approach to tax? Get meaningful insights from KPMG Tax & ESG. |
Integrating ESG across your organization requires thoughtful change and project management to understand the people, processes, and systems impacted by the transition. ESG transformation is a journey, and engaging your stakeholders at every level, each step of the way, is critical to program success and adoption.
