The world is becoming increasingly critical of companies that prioritize short-term profits over sustainable business practices. As such, there is an increased demand from investors and employees to work with companies that provide a net positive to the world.
Enter ESG (Environment, Social, and Governance) criteria. ESGs are a set of standards that stakeholders can use to determine if companies share their values or are at risk from sustainability issues in the future. In this article, we will break down what ESG standards are and how whistleblowing can increase your ESG score.
The ESG areas cover three broad areas of long-term sustainability namely:
The European Commission is expected to adopt a first set of sustainability reporting standards through delegated acts by 30 June 2023, as part of the Corporate Sustainability Reporting Directive (CSRD).The goal of the CSRD is to improve the comparability and quality of corporate ESG disclosures. This includes transparency about how the company is governed and specifically mentions the protection of whistleblowers.
Under the new sustainability reporting standards, companies will need to disclose information on certain governance factors, such as business ethics, corporate culture, and measures to prevent corruption and bribery. They will also need to report on the protection of whistleblowers and their policies regarding animal welfare.
A robust whistleblowing system can help an organization meet this specific criterion of the EU. Having a formal approach and tools for whistleblowing helps in several ways:
Having a whistleblowing channel in place makes it clear to investors, employees, and the public that you are committed to making your workplace as open and transparent as possible. Not only this, having an established whistleblowing system allows those in positions of governance within an organization to keep a finger on the pulse of their company and make better-informed decisions.
Having a whistleblowing system in place and promoting a strong speak-up culture allows companies to find areas of improvement from employees, the people who know their organizations best.
If employees know that your company prioritizes the environment and ethical work practices they can use that whistleblowing system to make suggestions to help your company reduce waste, improve performance, or identify business partners or liabilities that could hurt your ESG score.
Last but not least, having a whistleblowing system protects your stakeholder and your organization. If employees have the ability to report discrimination and abuse they will feel safer. If employees have a way to report questionable behavior such as suspicion of embezzlement or theft it allows your organization to address the issue before it becomes a liability.
ESG investing is here to stay and having a whistleblowing system in place is a fantastic way to increase your score.
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