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Environmental, Social, & Governance (ESG) Consulting & Advisory Services

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Develop a Successful ESG Program with the Help of BKD Trusted Advisors™

The drumbeat for increased and more standardized disclosures on environmental, social, and governance (ESG) issues has grown louder in recent months, but the path ahead is still murky. There is no one-size-fits-all ESG program because every organization faces unique issues and risks. BKD’s team of trusted advisors has the information to help you define ESG, explain its potential effects, describe various ESG frameworks, detail reporting, and get started on building your program. Whether you are an energy company, an investment firm, or any industry in between, BKD has the expertise to help you navigate ESG.

It’s clear that the demand for more information is not going away; however, many key questions need resolution:

  • Who will set the rules? The SEC, an existing advisory group, or a new group?
  • Will it be principles-based or prescriptive guidance?
  • Where should the information appear—SEC filing and audited financial statements or freestanding reports?
  • Will audits or assurance be required?

The vast majority of the S&P 500 companies already voluntarily publish sustainability reports, but companies use a variety of reporting frameworks and standards. The Global Reporting Initiative (GRI) Standards, the Sustainability Accounting Standards Board (SASB), and the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations are common examples, but there is no standard solution for all organizations. Ideally, a phased approach might be the best path forward to building your ESG program.

Read on to learn more about our approach or  to get in touch with a BKD Trusted Advisor™ to begin building your ESG program today.

Phase 1: Assess

First, executive leadership must play an active role in defining what success looks like. In this phase, assessing the ESG concerns of your investors is critical, as well as identifying the risks, opportunities, and key performance indicators when selecting a reporting framework.

Phase 2: Design

As the ESG program begins to take shape, the next phase involves developing the narrative and messaging, identifying data sources, helping ensure the reliability of that data, designing the ESG report, and developing a communication plan for all stakeholders, e.g., investors, customers, employees, regulators, and the media. Once that’s complete, then it’s time to help ensure the transparency of the reporting and look for technology solutions that facilitate reporting.

Phase 3: Implement

Next, it’s time to implement the messaging and a communication plan. Remember, investors, customers, employees, regulators, and the media represent your stakeholders. This is the part where advanced planning and intentional design of the ESG program can pay dividends.

Phase 4: Monitor

In the last phase, measuring and refining the reporting and messaging with feedback from stakeholders is critical. It requires constant dialogue to help ensure the plan is working as it should. Given the ambiguous nature of measuring ESG results and a growing appetite for third-party assurances from independent accounting firms to validate the efforts, this phase requires very intentional monitoring (this is not the time for a “watching from afar” approach).

What exactly is ESG?

Environmental – Encompasses how a company is exposed to and manages risks and opportunities related to climate, natural resource scarcity, pollution, waste, and other environmental factors, as well as a company’s impact on the environment.

Social – Comprises information about the company’s values and business relationships. For example, social topics include labor and supply chain information, product quality and safety, human capital topics such as employee health and safety, and diversity and inclusion policies and efforts.

Governance – Encompasses information about a company’s corporate governance. This could include information on the structure and diversity of the board of directors; executive compensation; critical event responsiveness; corporate resiliency; and policies and practices on lobbying, political contributions, and bribery and corruption.

If there’s any hard-and-fast rule, it’s that an ESG policy can’t be a document that gets written and then gathers dust. Investors will want to make sure that organizations are living up to the standards and practices they’ve developed. Investors are now applying similar scrutiny to ESG metrics as they do to financial metrics—scrutiny that managers need.

How can we help you?

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