White Paper

ESGRC – Setting sail towards sustainable performance

GRC as an incubator to harness the full value of ESG – A best practice approach

Venturing into the uncharted waters of sustainability and ESG is akin to an uncharted voyage, much like those undertaken by early explorers such as Ferdinand Magellan. Just as Magellan faced uncertainties on his journey, businesses today confront unknown challenges on the path to sustainability and compliance. The journey involves navigating new regulations, defining ambition levels, and addressing conceptual and technological options. This paper explores key aspects of this expedition, offering insights into the regulatory landscape, ambition setting, and the integration of sustainability into the business model. 

  1. Facing the Great Unknown:  
    The evolving sustainability landscape presents companies with numerous requirements, intensified by recent global mandates like the Corporate Sustainability Reporting Directive (CSRD) and SEC Climate Disclosure Rules. Our approach describes how companies can successfully understand and navigate those regulations. 
  2. Charting the Course:  
    Companies must define their level of ambition, ranging from mere compliance with regulatory requirements to full-scale integration of sustainability into their core business. Those who fully embrace these challenges must take on strategic integration, planning logic, proactive risk management, and embracing the future. The trend is shifting toward more proactive engagement, as indicated by the Horváth CFO Study of 2022
  3. Putting Together the Right Crew:  
    Integrating sustainability requires a thorough evaluation and restructuring of processes, organizational structures, and policies. Materiality analysis plays a crucial role identifying relevant sustainability matters aligned with the company's objectives and stakeholder expectations. Trustworthy Sustainable Governance involves interdisciplinary teams focused on performance management, sustainability, and risk management. 
  4. Finding the Right Vessel:  
    Data governance, technology, and systems of record are vital for compliance with sustainability regulations. Our ESG Value Stack outlines a systematic approach with five phases, including gathering data, performing measurements, testing business model resiliency, reporting connections, and articulating the story. Questions regarding data quality, harmonization of taxonomies, and AI/ML deployment are crucial. 
  5. Setting the Sails – Relying on the Compass:  
    To achieve the defined level of ambition, companies should assess their current state, define ambition levels, create a roadmap, establish trustworthy sustainable governance, harness technology, and prepare their teams for the future. Initiating this sustainability transformation now ensures a strong foundation for long-term success, resilience, and positive societal impact. Embarking on the ESGRC journey requires a strategic and proactive approach, with companies setting sail towards new levels of sustainable performance. Much like the explorers of the past who faced uncertainties, there were many rewards beyond the horizon.  

Download the full white paper to read about the whole journey.   

Cassel, D. / Dodge, C. / Grau, M. / Jäck, K. 
Published in: White Paper, 2024


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