How to Develop an ESG Strategy (GDA)
Business OpportunitiesMay 24, 2022 - Gda Revisori Indipendenti Spa
This is a thought leadership article from PrimeGlobal member firm GDA Revisori Indipendenti in Italy on how to implement an Environmental, Social, and Governance (ESG) strategy.
GDA Revisori Indipendenti (‘GDA’) understands that companies are no longer evaluated solely based on their ability to generate revenue and profits, but also on their ability to generate ethical results, such as social inclusion and environmental protection. To this end, it has developed a four-point plan that companies can adopt to improve their Environmental, Social, and Governance (ESG) credentials.
Step 1: Assessment
The first step GDA recommends is analyzing a company’s current sustainability position and identifying the specific issues relevant to that company. This involves preparing questionnaires for relevant stakeholders (identified with the management team) in order to:
- identify potentially relevant issues that will be evaluated as part of the sustainability report;
- determine the Key Performance Indicators (KPIs) to be used in the sustainability report;
- identify the level of awareness among stakeholders and the degree of implementation of good sustainability practices achieved by the organization as a whole;
- verify the company's awareness of how the processes already in place meet social responsibility objectives; and
- identify the most suitable interventions to address any existing gaps.
Step 2: Classification
The issues identified in step 1 are classified on the basis of the principle of materiality as required by international best practices. An issue is “material” where it reflects a significant economic, social or environmental impact and it substantially influences the assessments or decisions of stakeholders. The sustainability report should investigate those issues which are deemed most material.
In order to identify the issues that have the greatest impact on key stakeholders, an engagement process should be initiated with them. Their points of view should be assessed both during and prior to the reporting period (step 4). This, therefore, requires an iterative approach, with sessions in the classification stage (step 2) guided by evidence gathered in the assessment stage (step 1).
Step 3: Data confirmation
The third stage is data confirmation. In this step, each topic identified in phase 2 as “material”, and consequently to be included in the sustainability report, is subjected to the approval of the relevant decision-makers within the organization.
The topics identified as material are grouped into four macro areas:
- Economic responsibility and governance;
- Responsibility towards people;
- Environmental responsibility; and
- Product responsibility.
The documentation and information necessary for the preparation of the report are subsequently collected.
Step 4: Reporting
In the final stage, companies can proceed with drafting the sustainability report using national and international benchmarks. Companies should benchmark themselves against companies in similar sectors with comparable business models.
On the basis of the information collected in the previous phases, the company’s advisors should help the company devise an action plan which, once implemented, allows the company to achieve the objective of full compliance.
Gda Revisori Indipendenti Spa
GDA Revisori Indipendenti Spa is an audit company that was incorporated on March 24, 1987. GDA concentrates it's activities on auditing services and accounting organisation, and for this reason, we guarantee a maximum degree of independence with regard to our own clients. The head office is located in Milan, while five secondary offices are operating in Rome, Piacenza, Florence, Treviso and Pescara. Continuous monitoring of marketing and legal framework and our never-ending effort to adapt our structure and our services to the clients needs, allow us to offer our clients a wide range of services.Learn more