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Putting an ESG in Place


Wednesday, February 9, 2022

Do You Have an ESG? If Not, You Might Want to Read On

Life in HR is one awash with policies, papers and procedures and at times it can seem a little too “heavy” on the paperwork and lite on the hands-on practicalities of the role.

At the risk of suggesting more of that paperwork we would urge you to take a few minutes to review the following article and consider how it may help your organisation better position itself in the ever more demanding World we find ourselves competing in.

Environmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that were originally of primary interest to socially conscious investors. Prospective investors use the rating against benchmarks to screen potential investments and ensure that their money or that of their clients is placed with organisations operating within a clearly defined ethically and environmentally sound structure.

In addition to the original purpose of satisfying investors, the ESG status has become an area of interest for employees, potential hires, suppliers and customers.

Gen Z, Y and many younger millennials have become far more interested in the ecological and ethical impact of an employers’ activities. This information informs decisions as to the potential length of their tenure including a decision to join a company, buy goods or services from them or supply materials.

As the pressure to demonstrate efficacy in all actions corporations are turning to their ESG policies and processes to ensure they are not out of touch or at odds with stakeholders, customers and the wider communities in which they operate.

How do you establish an ESG policy?

  1. Identify areas of the business that are impacted by financial, social, human, environmental and a wider economic perspective and those who are responsible for each. Software tools to assist with the audit and assist in monitoring and reporting. The key is to determine how complex your particular organisation is and the resources required to undertake an accurate audit.
  2. Having completed the audit, it’s time to assess the company position against industry benchmarks and produce a report highlighting any gaps, shortfalls in performance vs the standard. Often the enthusiasm of creating a new business strategy may cause key steps relating to ESG to be missed. This is the opportunity to address those oversights.
  3. Having undertaken the research and identified the gaps set out a strategy to move the business forward, set high level objectives against a timeline for delivery. Be clear as to what will represent a successful outcome.
  4. Armed with the strategy and core objectives initiate a series of projects, (number and priority determined by the gaps identified). Establish a champion for each project providing defined timeline, actions and resources. It may be an idea to adopt a “traffic light” design equating to:
    • Green for those areas that are well managed and well within parameters of acceptability,
    • Amber for those areas that can be improved through a process of seeking marginal gains –
    • Red for areas that are flagged as in need of immediate attention – gender pay gap or your carbon footprint
  5. To ensure that the project champions are supported, and activities can be assessed set a regular time, monthly and/or quarterly for reporting progress and feeding information to the board. Any challenges internal or external to be flagged and acted upon to ensure momentum is maintained.
  6. Publish an updated position with regards to your ESG and set targets for the next 12 months repeating steps 2 to 5.

There are several organisations who would happily charge a fee and set this up for you however that would miss a key factor in taking the trouble to create an ESG policy.  As the employer you need to be directly engaged with this process. Delegating the task will leave you vulnerable to questions from the board, employees or customers, that you may well not be able to answer.  Being fully engaged in the creation of this ESG reporting process and ensuring an honest, fully self-aware appraisal of where you are will only serve to add confidence and ownership in the steps you need to take to reach your goals.

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