ESGRC Sustainability Concepts PDF

ESGRC (Sustainability is part of ESGRC) Environmental Social Governance Risk-management Compliance (CSR = corporate social responsibility → company has to care about the social impact of employees and also customers → being fair and equal in every aspect) - Green washing = make the pro...

ESGRC (Sustainability is part of ESGRC) Environmental Social Governance Risk-management Compliance (CSR = corporate social responsibility → company has to care about the social impact of employees and also customers → being fair and equal in every aspect) - Green washing = make the product appear sustainable but they are not aka. Green labels or colors (false sustainable claims) Emerging Trends (describe one of the emerging trends and describe briefly) - Climate change (global warming) oh - Digitalization and AI (evolving technology) - Shifts in the labour market (shortage of skilled workers, supply chain issues) - Globalization - Global instability (Political and economical, unstable global market and economic cycles) - Trade wars How to overcome these trends (tools): - Education sha) - Training - standards/ protocols (ISO systems) - CMS, compliance management system - ISO 37301 - Risk-management system - ISO 37001 - Environmental management system - ISO 14001 - Quality management system - ISO 9001 Management system - Requirements: (just for understanding) 1) Fulfills our legal requirements 2) Works within an organization 3) Integrates well into other existing systems Risks = any uncertainties that could impact an organization - Lack of info, unforeseen disasters and world events aka wars, natural disasters - Every organization has to identify their own risks, before taking any actions Disciplines that influence and go hand in hand between Sustainability and ESGRC: - Law 59 - Engineering - Environmental science - Political science - Economics and business Organizations should not only be sustainable when there are legal requirements, but they should always be sustainable (they should care by themselves) through active education and awareness. Sustainability reports = CSRD (Corporate Sustainability Reporting Directive) applies to all EU members states, serves as a public act and is separated from a financial reporting (use to advertise and show off sustainability efforts to investors and pubic) - Is a good face of the company  ➔ Regulatory requirements related to ESGRC and Sustainability extend across global, state and regional levels ➔ ESGRC is multidisciplinary and impacts all levels of an organization (5) ➔ Emerging trends in regulation are often related to sustainability as the CSRD ➔ Sustainability can be considered/is a moral and/or ethical necessity for society, not just for business ➔ Understanding ESGRC and SUstainability, is crucial in identifying risks ➔ The consequence of unsustainable practices can be awful (=jail and monetary fines) Sustainability is beneficial to companies because it attracts stakeholders (everyone who is impacted by the company: society, investors, employees, customers), making them more willing to support. - Companies needs to invest in the future (digitalization) - Risks should be assessed and monitored - Reducing risks is crucial to avoid disasters Note: what worked in the past, might not work today. Organizations who are unable to sustain themselves will fail. ➔ The value proposition of sustainability is one of long term growth and financial security, as well as piece of mind ➔ Resilient organization are those which plan for the future and looks over risks ahead of time ➔ Sustainability is good for organizations and society, so that we can all enjoy a future worth living Mandatory compliance → laws and regulations = binding requirements (issued by a national, regional, local government) Voluntary compliance → goals set by organization (financial and growth targets, investors satisfaction) ➔ Implementing and maintaining an integrated ESGRC management system (avoid island systems) starts and ends with compliance ➔ Benchmarks, standards and guidelines are our roadmap for these topics ➔ ESGRC and compliance management are fast becoming mandatory ISO = international standard organization - PDCA = plan → do → check → act (ISO 37301 - CMS) ➔ For sustainability and ESGRC, there are a lot of individual standards, management systems, tools and methods ➔ We need to make sure the appropriate systems, standards, tools, and methods are used correctly Paris Agreement: legally binding internal treaty signed by the UN in 2015 - Purpose: limit GHG (green house gas) emissions and keep global temperature rise below 2° - Net zero emissions in 2050 = no emissions at all ≠ carbon neutrality = eliminate carbon emissions all together, by trying to capture it Governance = system of rules, practices and processes by which a company is directed and controlled GRC = managing how organizations approach risks, how it embodies its goals EU Taxonomy = part of EU Green Deal, identifies sustainable economic activities ➔ Green washing is a problem and represents a failure of living the concepts of sustainability ➔ ESGRC topics often come from the world's largest institutions ➔ ESG and GRC have a lot of overlap and learning what these things mean is critical A company should follow up to the current trends in that sense, employ digitalization which will provide more sustainability. The 5 feature of a business person of the future: 1) Thinks ahead (minimize issues) 2) Delegate tasks (asks help) 3) A jack of all trends (willing to go extra mile) 4) Hands on (involves themselves physically in the business activity) 5) Conscientious (improves things) SWOT = serves as an initial risk assessment and finds areas for improvement and growth ➔ Digitization is and has been a huge trend, which has huge benefits to manage ESGRC but also comes with new risks ➔ ISO management systems (37301 - CMS, 14001 - EMS) are very helpful for organization in identifying and tracking their goals ➔ Understanding the context in which your organization is, is critical to identifying risks and opportunities Double materiality analysis: identifies the most important ESG topics, based on the desires/ needs of the company and stakeholders 1) Impact materiality → how the company affects people and the planet 2) Financial materiality → how sustainability issues impact the company’s financial performance and future potential ➔ Interested parties and materiality analysis helps to identify and manage the sustainability topics, relevant to the organization and stakeholders ➔ Double materiality means identify the impact of the organization on the environment but also the financial impact of the environment developments on the organization ➔ The materiality analysis makes it possible to react to risks and opportunities and to create sustainable, resilient business models C  ➔ Times are changing and it requires new approaches, strategies and learning to adapt ➔ Megatrends are currently and will continue to have profound impacts on how organizations operate SMS → better allocation of resources, helps avoid panic response, streamlines the division of labour - Reduce energy consumption - Creating better social conditions in workplace - Allows you to forecast, plan and prepare for all compliance deadlines and potential risks SMART goals = specific, measurable, attainable, relevant, timely ➔ SMS helps stay on top of sustainability goals and requirements ➔ Sustainability goals can be mandatory or voluntary but should be created, using smart as a guide ➔ When it comes to ESGRC and Sustainability, documentation is always important + communication ➔ Management systems are tools and should be made to work for the organization so that goals can be reached, makes our life easier ➔ Establishing the scope of a CMS (or any management system) is the first step ➔ Compliance is always important and requires some sort of system to manage. First and foremost, compliance must be maintained US = federal, state and local → levels of regulations ➔ A management system isn't just a document but the practices that get implemented ➔ Management systems require regular updates, maintenance and improvement to be successful ➔ Compliance on the ground is oftentimes where management systems succeed or fail, they must be lived Building a compliance team: lawyers, experts, subject matters experts, consultants Internal Compliance (voluntary): corporate policy, inhouse protocol, performance target, internal audits and inspections, quality control External Compliance (non-governmental): compliance with the needs of customers and stakeholders, may not incur legal action or fines, can be quite crucial - Quality requirement from customers, wishes and requests from public, inspections and audits from partners’ organization - Failure to comply = displeased customers, who will go to competitors, reputation damaged, less profits, attract attention from authorities ➔ There is always an obligation to be compliant and that includes all the ESG topics ➔ Compliance comes, not only from external sources, but also through internal company policy and strategy. These compliment compliance goals. ➔ Compliance must embody organization wide for CMS to be successful. Plans must be into place and acted upon daily activities Compliance comes from: State Governments, The EU Parliament, Management, Contracts, Investors Compliance Aspects to Consider: Lawful, Regulatory, Contractual and Internal CMS: 1) Audit = identify relevant laws and regulations 2) responsibilities = responsible people for the law 3) System kick-off = recommended action (emails, meetings, face-to-face meetings)  4) Review = changes internally and externally/recommendations ➔ Compliance can come from you at all angles, but it's important to prioritize and identify where compliance goals come from ➔ Operating and maintaining CMS is crucial and sometimes is even required by law ➔ Compliance isn't complicated but can be complex Business continuity: impact analysis (double materiality)→ recovery strategies (when smt bad happens)→ 4 plan development (smart)→ testing and maintenance (pdca) ➔ Risk is the effect of uncertainty of goals ➔ Conducting a risk assessment is something every organization should get in the habit of, that includes risks associated with compliance Risk management tools or system: - Written protocols - Safety precautions - Early detection systems - Codes of conduct - Background checks ➔ Risk management and proper governments act as a wall against uncertainty ➔ Risks aren't always bad, sometimes uncertainty can lead to new innovations or opportunities for the organization