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ESG Reports - A Significant Source of Obligations


ESG Reporting
ESG Reporting

In recent months while reviewing several ESG reports I noticed that these reports have evolved from simply reporting on Environmental, Social, and Governance as ambiguous as that can be. They have expanded to include many other topics of interest to stakeholders such as:

  1. Diversity, Equity, and Inclusion

  2. Sustainability

  3. Health and Safety

  4. Cyber Security

  5. Privacy Protection

  6. Information Security

  7. Climate Adaptation

  8. Enterprise Risk Management

  9. ESG Priorities and Initiatives

  10. And many others

ESG reports are also becoming a significant source of internal obligations as they are filled with board level commitments, goals, and targets.

In previous blogs I discussed that ESG has more to do with a social license to operate rather than a legal one. In this context, "social" can be substituted for "stakeholder" – anyone who has a stake in the activities of the business.

As a result, managing ESG commitments will most likely fall outside traditional compliance programs structured around legal and mandatory obligations.

In fact, ESG commitments tend to be performance and outcome-based which requires organizations be proactive and integrative in their approach. This will mean more programs to introduce change rather than only systems that resist change to achieve consistency and conformance.

The need for compliance to adapt to performance and outcome-based obligations has been happening for some time for those in highly-regulated, high-risk industries specifically around safety. It appears that ESG commitments will be added to these and may now become a key and perhaps dominate driver of compliance change.

What we can be certain of is that reactive, check-box compliance focused on audits and action items will not be enough to address ESG commitments. Instead, compliance will need to be re-imagined and engineered to advance outcomes and meet targets in the presence of uncertainty.

If you want your compliance team to learn how this is done consider joining "The Proactive Certainty Program™". This program teaches you how to take a proactive and integrative approach to compliance so you can always stay between the lines and ahead of risk.

Take the first step and complete the scorecard available here.

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