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
