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Demystifying ESG

Stakeholders are measuring companies against the ESG framework. Therefore, understanding the framework, how it will impact you, and how to address it is a must.

The world is changing

As a threat of harm led to commitments to improve human lives and protect the environment, countries are transitioning to sustainable economies. This transition will impact organizations and businesses, no matter how big or small.

What is sustainability?

Sustainability is more than just climate change and carbon reduction. It is an approach to managing interlinked issues of resources, people and the planet in a way that will ensure the needs of the current generation are fulfilled without compromising our future generations. Achieving sustainability will lead to a balance between economic growth, environmental care and social well-being.

  • ExampleWhile building a hydroelectric dam may provide a source of renewable energy and employment opportunities, it could also have impacts on local and indigenous communities, the ecosystem and biodiversity.  Sustainability considers that all short and long term impacts should be considered as part of cost-benefit.

What is Environmental, Social, and Governance (ESG) and how does it relate to sustainability?

ESG is a widely accepted measure of sustainability that organizations can use to map out their journey to becoming more sustainable and understand how the transition to a more sustainable economy will impact them. 

More importantly, it is also the framework against which your sustainability credentials, and long-term viability, will be assessed by your most important stakeholders. 

Like sustainability, the individual elements of E, S, and G are interlinked and reflect both the internal changes that organizations can make to positively impact the world, as well as the external factors that may negatively impact them as an organisation.

Click on the below to learn more about the individual elements of the E, S, and G.

This reflects matters that are focussed on the planet, not just climate change! It also includes energy efficiencies and how to hit net zero, carbon footprints, greenhouse gas emissions (GHG), deforestation, biodiversity, waste and other environmentally sensitive issues.

Split into internal social factors of the firm such as employee rights, fair pay, D&I, anti-corruption, grievance procedures, innovation and research & development and External factors of the firm such as, social violations, exposure to child and adult trafficking, customer satisfaction, animal rights.

Is the foundation to realizing and incorporating the “E” and “S” into your organization and how you communicate your credentials.  It also related to corporate governance considerations such as board and management structures, internal controls, policies & standards, auditing, compliance, remuneration, risk management and disclosures that form your ESG strategy.

Understanding the ESG framework, how it will impact you, and how to address it, is key for ensuring the long lasting success of your organization.

Here to help you tell your ESG story

If you don’t assess and communicate your ESG credentials, someone else will.  Marsh has the capabilities to help you tell your ESG story to suppliers, future partners and insurers; providing solutions such as our ESG Building Blocks to guide you through the process.

Visit our ESG Risk Rating page, which offers an award winning complimentary self-assessment that enables you to measure your organization’s environmental, social, and governance performance, improve your ESG risks, and gain access to risk and insurance benefits.

Environmental, Social & Governance

Arrange a meeting with your Marsh Contact or complete our free ESG pulse checker for a snapshot of your credentials.

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