Sustainability

Don't Conserve, Just Don't Waste  

Sustainability is Balance


ESG and Sustainability

The demand for transparency on sustainable and socially responsible practices is on the rise. Companies are accountable to their various stakeholders like investors, customers, employees, and nongovernmental organizations (NGOs) that want to evaluate a company’s impact on the world. Environmental, Social and Governance (ESG) analysis and reporting can provide valuable insights and help create long-term value for stakeholders. It can significantly impact the financial metrics of a company and better inform investment decisions.

The terms “ESG” and “sustainability” are used interchangeably, especially when it comes to benchmarking and disclosing data. Sustainability is an umbrella term for many green concepts and corporate responsibility, while ESG has become the preferred term for investors and the capital markets. The industry may have started with sustainability efforts, but it has evolved to include ESG practices, performance, reporting and relevance to capital opportunities. ESG data helps identify risk-adjusted returns. Emphasis on all three pillars has aided the shift in how companies measure and disclose their performance.

ESG Reporting

ESG reporting refers to the disclosure of data covering the company’s operations in three areas: environmental, social and corporate governance. It provides a snapshot of the business’s impact in these three areas for investors.

The analysis of performance across these ESG factors summarizes quantitative and qualitative disclosures and helps screen investments. ESG reporting helps investors avoid companies that might pose a greater financial risk due to their environmental performance or other social or governmental practices.

While it’s still voluntarily for most countries, there are increasing global regulations regarding corporate ESG data reporting. Proactive and future-focused companies understand the importance of communicating ESG criteria in their business strategy and purpose. They are voluntarily providing their ESG data in their annual reporting.

  • Companies with strong ESG performance have demonstrated higher returns on their investments, lower risks and better resiliency during a crisis.
  • As of July 2020, 90% of companies in the S&P 500 have already  published  their annual corporate sustainability/ESG reports.

ESG transparency will be a key focus for companies in 2021 and beyond. Investors are increasingly considering ESG issues to help manage investment risks. The Deloitte Center for Financial Services expects ESG-mandated assets in the United States to comprise  50% of all professionally managed investments by 2025  ESG performance improvements and reports show investors how a company mitigates risks and generates sustainable long-term financial returns.

On the other hand, companies that do not provide these reports show a lack of transparency and concerned investors may overlook them as potential investments.  (sphera.com)

Sustainability and MSMEs

We support MSMEs in reducing their environmental, social and economic footprints. By incorporating sustainability in their operations, the future of environmental, economic, and societal resources critical to MSMEs operations  will be secured in the long term.  

Before MSMEs can incorporate sustainability and ESG reporting in their operations they must first establish a plan of action outlining how the organization propose to achieve goals that create financial, societal and environmental sustainability. 

A MSME's Sustainability Plan can be simple or complex depending on the size, type and capacity of the organization. It could be a simple two-page document that focuses on a long-term vision and broad goals, or a  complex document that outlines specific targets, quantitative indicators and a detailed timeline. What is important is that the MSMEs takes the first step to holistically managing the impacts – both positive and negative – that the organization has on the environment, community and economy.

5 Stages of a Simple Sustainability Plan

1. Develop a vision

Familiarise yourself with sustainability and what it means to your organization, while at the same time involving all stakeholders.

2. Evaluate the current impact

Analyse your business inputs, processes, and outputs to be informed as to what impact they have on sustainability in light of your stated vision.

4. Develop an action plan with specific timelines & follow through.

Determine what specific systems and detailed processes will achieve your targets and goals. Break then down to discrete activities, practices or policies and then make sure someone is responsible for each  item. Establish timelines for your targets.


5. Establish performance measurements.

Design a system that measures the performance towards each goal. Defining key performance indicators to meet the identified goals will allow detecting areas for improvement and will provide relevant data to track progress. Metrics and indicators are also central for the reporting and communicating activities of the organization.

3. Set goals and targets

Using your vision  and current impacts as a guide, determine what long-term goals you have for your organization. Then use these goals to determine what interim-targets you need to set to achieve your overall goals.