Capital 6 Flashcards
What is the purpose of the proposed governance structure for sustainability?
- To implement an ESG strategy using five governing bodies that
- ensure effective coordination, monitoring, and alignment of sustainability goals with the corporate vision.
What are the five bodies of the governance structure for sustainability?
1.Board-level committee
2.Management-level committee
3.Corporate sustainability team
4.Cross-functional teams (temporary)
5.Regional sustainability team (permanent)
What is the role of the Board-level Committee (1)?
- Provides overall strategic recommendations and direction
- Oversees progress on sustainability projects and targets
- Ensures alignment with overall corporate strategy and vision
What responsibilities does the Management-level Committee (2) hold?
- Sets the direction of ESG strategy, goals and initiatives
- Takes key decisions on prioritization, targets & budget/resourcing
- Monitors progress on key initiatives and current performance
What does the Corporate Sustainability Team (3) manage?
- Manages corporate sustainability and CSR activities incl. disclosure and reporting, stakeholder engagement, performance monitoring
- Acts as activist secretariat for management on implementation
- Develops and advises management on sustainability strategy
What are the responsibilities of Cross-functional Teams (Temporary) (4)?
- Execute topic-specific initiatives and activities
- Regularly report progress to management-level committee
- Coordinate implementation with Corporate Sustainability Team
What is the purpose of the Regional Sustainability Team (Permanent) (5)?
- Support execution at the regional and project-company level
- Share best practice across project companies & ensure alignment
- ESG agenda across project companies & locations
What is the key requirement for a good ESG set-up?
To strike the right balance between
- central coordination and responsibility within the business,
- with maturity evolving over time.
What characterizes the initial stage of an ESG set-up?
- Initially high level of central coordination
- Senior oversight is required to set the foundation for ESG practices.
How does the ESG set-up evolve over time?
- Stronger alignment with business priorities.
- Increasing focus on implemen-tation within the decentralized units.
What are the three organizational archetypes for ESG?
1.Centralized Coordination:
- Sustainability is under a Chief Sustainability Officer (CSO) or Sustainability Director (SD)
- reporting directly to the CEO
2.Intermediate Coordination:
- Sustainability is embedded within Business Units (BU) or
- as a Sustainability CoE (Center of Excellence) under SVPs
3.Decentralized Responsibility:
- Responsibility for sustainability lies within Business Units (BU) with minimal central oversight
Why are KPIs critical for ESG success?
Outside:
- Key for communication.
- Used as input for ratings and investor decisions
Inside:
- Helps in business steering
- Drives impactful action via ambitious targets
- Aligns executive incentives
- Enhances employee engagement.
What are examples of social KPIs for ESG performance?
Diversity:
- Percentage of women employees.
People Development:
- Employee satisfaction levels
Workforce:
- Percentage of employee turnover.
Safety:
- Total injury rate.
- Lost time injury rate.
Community:
Donations as a percentage of net sales or revenue.
How are spefici KPIs developed?
- overarching targets will be set at Group level, based on Materiality and peer benchmarking
- they will then be translated into individual contributions, leading to specific KPIs for each operating company
What is the process of defining KPIs and targets?
1.First, group-level material topics and peer benchmarks will be used to define overarching
targets…
2.which will then be translated into targets for each OpCo1 to
define individual contributions
What are the key best practices for ESG reporting?
1.Adhere to existing frameworks
2.Build data capability and management
3.Engage with ESG ecosystem
4.Share positive investor stories
Key best practices ESG reporting:
What is to be done in adhere to exisitng frameworks?
- Report material issues that matter to investors (i.e. SASB)
- Report on impact (i.e. SDGs) vs. outputs
- Strategically select what to report on
Key best practices ESG reporting:
What is to be done in build data capability and mgmt.?
- Adapt data tracking to new reporting requirements
- Work with parties along supply chain for data
- Use interactive tools to share data w/ investors
Key best practices ESG reporting:
What is to be done in engage with ESG ecosystem.?
- Reduce data raters’ influence via high-quality reporting
- Align to standards preferred by community
- Drive consensus among industry and peers
Key best practices ESG reporting:
What is to be done in share positive investor stories?
Articulate ESG impact & financial relationship, for investors to incorporate ESG activities in models
