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Implementing Environmental, Social and Governance (ESG) Principles for Sustainable Businesses

A Practical Guide in Sustainability Management

verfasst von: Tracy Dathe, Marc Helmold, René Dathe, Isabel Dathe

Verlag: Springer International Publishing

Buchreihe : Responsible Leadership and Sustainable Management

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

The concept of environmental, social and governance (ESG) is rapidly emerging as the new global industry standard and an important benchmarking tool for socially responsible investments. Major corporations seek the expertise of specialized consultants to develop and implement tailored ESG framework for their businesses.

This book offers a guide to ESG and its practical applications. Beyond introducing the structured procedures of the most common ESG approaches, it delves into the comprehensive impact on the value chain, providing practical insights. The text explores the latest trends in various business sectors, offering insights into their ESG practices. Closing with a forward-looking perspective, the book anticipates future developments such as climate change management and ESG certifications, while also addressing potential pitfalls encapsulated by the term “greenwashing”.

Written by authors with a solid background in teaching and research, the book establishes a robust theoretical foundation. The inclusion of numerous practical examples and country-specific recommendations enhances this book’s applicability and makes it an invaluable resource to those navigating the complexities of ESG.

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Inhaltsverzeichnis

Frontmatter

1. Introduction: ESG and Corporate Accountability

Abstract

The world has witnessed significant transformations in various aspects of society and the economy, including social movements advocating for environmental and societal causes, the global integration of economies through globalization, the rapid adoption of digital technologies in industrial processes and the pervasive impact of social media, which have all contributed to a dynamic and interconnected world.

Tracy Dathe, Marc Helmold, René Dathe, Isabel Dathe

2. Emergence of ESG Principles

Abstract

This chapter delves into the emergence of the concept of environmental, social and governance (ESG) principles that have become a fundamental component of corporate strategy in terms of responsible business practices worldwide. It traces the historical development of ESG that began with a joint task force initiated by the United Nations (UN) to address growing social and ethical concerns about business practice. In addition, it explores the diverse stakeholders involved in initiating the ESG movement such as analysts, the private sector, business consultants and independent financial advisors, financial institutions, pension funds and pension trusts, investors, non-profit organizations (NGOs), regulators and stock exchanges. Subsequently, it highlights the significance of the Conferences of the Parties (COPs) in shaping the ESG policies and frameworks.

Tracy Dathe, Marc Helmold, René Dathe, Isabel Dathe

3. ESG-Related Theoretical Frameworks

Abstract

To develop optimal environmental, social and governance (ESG) solutions, companies should set clear strategic goals based on a holistic approach and deploy robust monitoring and reporting systems. In real-world practice, the notions of sustainability, corporate social responsibility (CSR) and Sustainable Development Goals (SDGs) have proven to be effective instruments to enhance shared values and prioritize stakeholder engagements.

The following sections will provide an overview of the above key concepts that are closely related to the ESG principles and shed light on how they can be implemented in a holistic ESG strategy framework.

Tracy Dathe, Marc Helmold, René Dathe, Isabel Dathe

4. Public Policies

Abstract

This chapter focuses on the role of public policies in guiding the environmental, social and governance (ESG) practice in a society. It introduces the fundamental functions and responsibilities associated with governments, especially the influence of economic public policies. Through a critical discussion on the benefits and challenges of interactions between the government and the private sector, this chapter depicts how private businesses on one hand can boost competition and innovations, increase cost efficiency and consumer benefits, while on the other hand, they can also cause conflicts of interest by exerting influence on the political landscape and decision-making process within a society, so that governance mechanisms are necessary to increase transparency. The chapter also introduces the role and importance of non-governmental organizations (NGOs) and social enterprises.

Tracy Dathe, Marc Helmold, René Dathe, Isabel Dathe

5. Corporate Strategy

Abstract

This chapter outlines the role of corporate strategy in shaping the overall decisions such as business purposes, directions for business development endeavours and the importance of alignment of all strategic choices with the overall corporate strategy. It introduces the process of the strategic management cycle with the elements of strategy analysis, strategy choice and strategy implementation that aim to answer the important questions in terms of corporate strategy and market positioning such as “Who are we?”, “Where are we?”, “Where do we want to go?” and “How do we achieve this?”. It also provides a detailed description of some common instruments for strategy development such as PESTEL analysis, Porter’s Five Forces, SWOT analysis and core competencies analysis.

Tracy Dathe, Marc Helmold, René Dathe, Isabel Dathe

6. Strategy Selection

Abstract

The selection of the optimal strategic option is essential for long-term business success. Such strategic choice is a comprehensive process that involves narrowing down the strategic options after thorough consideration of the possible impacts of the most influential internal and external factors. This chapter begins with the introduction of Mintzberg’s strategy definition in terms of his 5Ps model that includes the core elements of plan, ploy, pattern, position and perspective, followed by the key selection criteria for strategic choices. Subsequently, some effective strategic management instruments can facilitate the strategy selection process in business practice, such as Porter’s generic strategies, Ansoff matrix, BCG matrix, McKinsey 7-S model and Blue Ocean vs. Red Ocean Strategy.

Tracy Dathe, Marc Helmold, René Dathe, Isabel Dathe

7. Strategy Implementation

Abstract

This chapter aims to demonstrate the process of strategy implementation that includes the elements of strategic goals and objectives, action plans, resource allocation, change management considerations as well as appropriate monitoring and evaluation instruments.

While the concept of strategy architecture that comprises various key aspects of a business model can be used to design and communicate a comprehensive corporate strategy, the balanced scorecard (BSC) often finds application in connection with the corporate vision and strategy with operational performance management. Furthermore, strategy implementation implies changes that can lead to resistance among employees – a natural reaction to fear, uncertainty or a lack of understanding. This chapter also entails change management as a management concept that engages employees in the change efforts which enhances their commitment, reduces resistance and increases the likelihood of successful implementation.

Tracy Dathe, Marc Helmold, René Dathe, Isabel Dathe

8. Approach to ESG Policy

Abstract

In business practice, developing and implementing effective ESG policy is not without challenges. This chapter briefly outlines some of the major challenges and provides a detailed description of a framework recommended by McKinsey that entails the processes for conception and development, as well as for the implementation of a comprehensive ESG policy.

A successful ESG policy requires a comprehensive understanding of the strategic purpose of ESG initiatives and the level of performance targets. The effective development and implementation of ESG policy involves the processes of mapping the business model with ESG dimensions, defining ESG targets and monitoring tools for the organization, embedding ESG in the overall business strategy as well as a well-designed communication strategy for stakeholder communication to maintain social license to operate.

Tracy Dathe, Marc Helmold, René Dathe, Isabel Dathe

9. ESG Stakeholders

Abstract

To develop a successful ESG policy, it is crucial to understand the needs and concerns of all relevant stakeholders. This chapter depicts the role of stakeholders in modern business processes. The decisions and actions taken by the company can have far-reaching consequences that are not confined to financial impacts, affecting various stakeholders and the broader society. By acknowledging and addressing the interests of the key stakeholder groups, companies can create value, contribute to society and achieve in turn long-term economic success.

The chapter begins with an introduction of the concept of stakeholder, followed by the evolution of stakeholder theory, and sheds light on the role of stakeholders in the sustainable success of business undertakings. Furthermore, it presents a practical framework for stakeholder relationship management as an integral component of ESG management, including identifying, prioritizing, mapping and engaging major stakeholder groups, as well as possibilities for monitoring ESG stakeholder relationships. The visualization of stakeholders with the Stakeholder Circle approach further facilitates the understanding of stakeholder characteristics and the planning of stakeholder engagement in practice.

Tracy Dathe, Marc Helmold, René Dathe, Isabel Dathe

10. ESG in Risk Management

Abstract

Over the past decades, investors increasingly acknowledge the importance of environmental, social and governance (ESG) factors in evaluating a company’s financial viability over the long term. Thus, ESG issues have become a crucial element in risk management.

This chapter delves into the fundamentals of risk management and introduces a practical four-step framework designed by PWC to guide ESG risk management in business practice. Furthermore, ESG processes are examined in alignment with the risk management standard ISO 31000:2018.

Tracy Dathe, Marc Helmold, René Dathe, Isabel Dathe

11. ESG Reporting Rules

Abstract

Effective stakeholder communication is essential for overcoming the challenges of the principal-agent dilemma in complex stakeholder relationships, enhancing management accountability and active stakeholder engagement. Therefore, transparency of ESG reporting is pivotal for conveying an organization’s ESG performance and dedication to the public.

With the globalization of business activities, ESG reporting gains significance as cross-border operations engage with culturally diverse markets. Amid varying regulatory frameworks and societal expectations in different countries, comprehensive and standardized ESG reporting procedures are crucial for transparent and cost-efficient stakeholder communication.

This chapter delves into the European Union’s ESG legal requirements on ESG reporting by means of the Corporate Sustainability Reporting Directive (CSRD) and the EU Taxonomy, alongside the introduction of some most influential ESG reporting standards in industrial practices.

Tracy Dathe, Marc Helmold, René Dathe, Isabel Dathe

12. ESG Metrics

Abstract

ESG metrics are performance indicators, mainly of non-financial nature, designed to assess an organization’s commitment to sustainability and responsible business practices. These metrics provide valuable insights. This chapter offers a comprehensive overview of typical ESG metrics in various aspects of practical applications.

Furthermore, this chapter explores the landscape of ESG ratings. The ESG ratings allow stakeholders, especially investors, to compare a company’s performance with its peers, in order to make informed investment decisions.

Finally, it discusses the impact of ISO standards and certifications in various industry sectors and introduces the approach to a successful certification process.

Tracy Dathe, Marc Helmold, René Dathe, Isabel Dathe

13. Consumer Relationship and Sustainable Talent Management

Abstract

Consumers and employees hold a special place among a company’s stakeholders in maintaining the brand image. This chapter is dedicated to their roles in shaping corporate ESG strategy to best meet their needs and requirements.

It begins with depicting the emerging power of consumers in influencing corporate decision-making, especially by enhancing sustainable consumption worldwide, followed by an introduction of legal and ethical norms for consumer protection to ensure product safety and fair, honest treatment of consumers. Subsequently, we dive into various aspects of modern talent management, addressing both the main processes of talent management and some major instruments for the promotion of optimal employee experience.

Tracy Dathe, Marc Helmold, René Dathe, Isabel Dathe

14. Sustainability Marketing

Abstract

The market is the arena where companies engage in a dynamic exchange with their customers, seeking to provide value in the form of products and services in return for revenue. To thrive in this competitive ecosystem, companies rely on a well-designed marketing strategy that serves as a roadmap for achieving sustainability goals.

This chapter begins with an introduction to the fundamental concepts of classic marketing strategy, followed by discussions on current issues in incorporating ESG into the marketing strategy, such as the Creating Shared Value (CSV) approach and Cause-Related Marketing (CRM) strategy design, and the strategic choices based on the transformative marketing concept, including the emerging new business opportunities and the challenges and control of risk factors.

Tracy Dathe, Marc Helmold, René Dathe, Isabel Dathe

15. Sustainable Supply Chain

Abstract

Sustainable supply chain management encompasses a range of topics and considerations aimed at minimizing environmental impacts, promoting ethical practices and ensuring economic viability throughout the supply chain.

Today’s companies operate in a highly interconnected global marketplace. Globalization has led to complex supply chains that cover multiple countries and continents. As a result, the actions and practices of suppliers in different parts of the world can have far-reaching consequences. While governments around the world are enacting stricter regulations related to environmental protection, human rights and labour practices, companies are now required to ensure that their entire supply chains, including direct and indirect suppliers, comply with these regulations.

This chapter introduces the fundamental concepts in supply chain management, as well as the significant challenges in implementing ESG in global supply chains.

Tracy Dathe, Marc Helmold, René Dathe, Isabel Dathe

16. Outlook to ESG Future Trends

Abstract

This chapter introduces some current and emerging challenges faced by businesses in their ESG implementation, as well as potential future trends and developments. It begins with a discussion on growing legal pressure for climate change contributions, followed by an introduction of green financing that facilitates capital allocation to investments with positive environmental impact, and some major instruments and mechanisms of this concept such as green bonds. Furthermore, it explains the evolving carbon pricing practices, as well as the trend of consolidation of ESG reporting standards and its possible impacts on business organizations. Finally, it elaborates on the benefits and challenges brought about by disruptive innovations such as artificial intelligence (AI) and data analytics and how business organizations can adapt to the rapidly changing world to optimize their ESG practices and attract socially responsible investors and customers.

Tracy Dathe, Marc Helmold, René Dathe, Isabel Dathe

Backmatter

Titel: Implementing Environmental, Social and Governance (ESG) Principles for Sustainable Businesses
verfasst von: Tracy Dathe
Marc Helmold
René Dathe
Isabel Dathe
Copyright-Jahr: 2024
Verlag: Springer International Publishing
Electronic ISBN: 978-3-031-52734-0
Print ISBN: 978-3-031-52733-3
DOI: https://doi.org/10.1007/978-3-031-52734-0