Overview:
Introduction to ESG: This will include a brief 5 minute introduction to ESG and why it is important. This will cover the increasing scope of ESG regulations and how over the coming years, more and more Firms will fall into scope to comply with newly introduced regulations. The section will also note that even Firms that are not obliged, their own Customers may introduce ESG requirements and therefore it is important for all Firms to consider ESG.
Identify how ESG regulations affect operational effectiveness of Firms.
This will include:
Considerations of an Effective ESG Agenda: This will include:
- Monitoring internal ESG commitments: Management should appoint an individual or team to monitor the company’s ESG commitments as well assess competitors.
- Educating and training employees: All employees should be aware of the Firms ESG commitments through regular training. Individuals that are responsible for ESG documentation should also be aware of the risks associated with public documents and understand the importance of ensuring that ESG documents are consistent with the Firm’s business.
- Effectively measuring ESG performance: Those responsible for ESG within the Firm also need to establish procedures to determine whether or not the ESG commitments and objectives are being met. Doing so can help Firms identify potential vulnerabilities and weakness and mitigate any associated risks.
- Treating all ESG statements as public statements: ESG statements, whether made by a public or private firm should be treated as legal disclosures. ESG statements made publicly should be checked to ensure factual accuracy and ensure that objectives set are realistic in relation to the NOB of the Firm and its size.
Setting Realistic ESG Objectives
Defining & Embedding Risk Frameworks: Firms will need to consider ESG as part of their risk frameworks. This will cover:
- Risk Appetite Statements: A Firms risk appetite statement should include consideration of sustainability risk.
- Risk Management: Including the implementation of Governance Structures, defining Risk Ownership and compliance with the relevant regulatory requirements, and ensuring reporting standards are met effectively.
Understanding how ESG will affect the Customer Lifecycle Journey
Upcoming Irish ESG Developments: This will include (not exhaustive):
- Private sector ESG initiatives
- The ESG regulator in Ireland
- Material enforcement actions
- CBI Expectations
- Key Issues
Key Takeaways
Getting ESG right is complicated, and the regulatory landscape is continuously evolving. Sustainable businesses are more efficient by reducing operating costs and lowering staff turnover and often, more attractive to investors and employees, particularly Millennials and Gen-Z. The best businesses engage, inform, and improve outcomes for themselves, their industry, and their customers.