Business-Impact Accountability: A Global Look at Environmental, Social and Corporate Governance (ESG)
Greater awareness in recent decades has lead to increased regulation around a number of environmental and social issues. Where are we in this journey? Why aren’t we further along? This article explores the benefits we can all enjoy from good global business practices, as well the barriers for ESG reporting in many countries.
Recent decades have brought with it an increased concern for societal and environmental impacts. This is placing greater responsibility on companies to ensure that sustainability and human rights are respected within their organisation and across their supply chain.
As awareness for Environmental Social Governance (ESG) increases, the owness and responsibility for the likes of ethical labour practices and environmental protection is now being placed squarely at the feet of organisations in some leading countries. This requires them to fully understand the scope of their impact and be held accountable for ensuring that all social and environmental impacts they make are positive. This set of criteria is also used by socially-concious investors to sceen their investment opportunities.
Some examples of these leading countries include:
- In the United Kingdom, reporting on greenhouse gas emissions, diversity and human rights under the Companies Act 2006 (Strategic and Director’s Report) Regulations 2013 is required for quoted companies.
- The European Union requires certain large companies to disclose environmental, social and employee-related matters, including anti-bribery, corruption, and human rights performance.
- China has seven regulations that act as mandatory disclosure on sustainability matters.
- The United States mandates the listed companies to adopt and disclose a code of business conduct and ethics.
For businesses governed by these, it means operating with integrity, building greater transparency across your supply chain, ensuring ethical employment and business practices, and actively reducing your carbon footprint.
What about the rest of the world?
Although we’ve made progress in the right direction, these topics still remain in heated discussion in a vast majority of countries, where ESG reporting is met by number of barriers, including:
- A lack of industry-specific sustainability standards.
- A lack of consensus with the country, which includes counter-arguments around whether ESG reporting should be mandatory or voluntary.
- Incompatibility of a countries’ governance, including issues in validating reports as well as corruption.
The surrounding debate is by the most part, divided between countries that view ESG reporting as mandatory, others that view it as encouraged or voluntary, and many who do not mandate it at all. The benefit and the challenge is such that, on the good side:
- Organisations who report on their ESG and Corporate Social Responsibility (CSR) performance stand themselves in good stead for further investment. Many investors are demanding that companies define their scope of non-financial risk and report on social responsibility as part of their portfolio.
- Compliant organisations make business decisions that benefit a sustainable future, rather than harm it.
The challenge however:
- Companies with global operations are then required to remain on top of all sustainability requirements imposed in jurisdictions where they operate. This ‘additional work’ is being viewed as more of a headache and another barrier to easy business operations.
- Another obvious challenge: Companies with unethical business practices would find it undesirable.
At the end of the day, this should not be about easy, but about what’s right. After all, a combined lack of good practice around the world only results in an adverse impact for all. It is imperative that we get to the stage where human rights, corporate social responsibility and environmental sustainability is promoted, mandated and regulated globally.
Companies should start to prepare themselves for rising regulations and begin implementing clear frameworks, control systems and monitoring to prevent business-related impacts on human rights and sustainability. Respecting these serves to not only improve the world that we all live in, but will be required for organisations if they want to avoid lawsuits, crippling fines and irreversible brand damage.
At Alyne, we have partnered with organisations in order to make an impact in the areas of sustainability, human rights and environmental governance.
Sustainability Across Your Supply Chain
Alyne’s partnership with a KPMG combines industry-leading expertise on human rights and sustainability with next-generation technology to help our customers comply with human rights regulations in their organisation and across their supply chain, on topics such as:
- Elimination of forced and compulsory labour
- Abolition of child labour
- Anti-discrimination in employment and occupation
- Just and favourable working conditions
- Freedom of association and collective bargaining
Through Human Rights Risk Assessments (HRRA) organisations will have the ability to:
- Quickly and efficiently assess their supply chain
- Perform detailed Gap Analysis’ to identify the areas requiring attention
- Obtain deep reporting on their Risks, allowing organisations to address their risks accurately and in a timeously manner
- Comply with Human Rights and Sustainability laws in a simplified and digitised platform
Environmental Sustainability – eMoblility
Within the scope of environmental impact and sustainability, Alyne has partnered with Paladin (Powered by Gemserv) to deliver the technology to help organisations navigate the compliance, risk management and regulatory transition towards electric mobility and cleaner means of transportation. The vision with this partnership is to add value in the transition from fossil fuels to electric mobility through simplified compliance with the regulations and laws across industry sectors. The platform provides you with all the necessary tools to mitigate and reduce your risk exposure and ensure business continuity as fossil fuels become phased out.
Stay tuned over the coming months as we dive deeper into these topics through new articles, webinars and podcasts.