Abstract
Throughout the centuries, companies have faced a wide range of challenges and changes that have caused them to rethink their strategies and redesign their organizations. The recent focus on environmental, social, and governance (ESG) performance is one of the new challenges facing companies today. ESG builds on prior Corporate Social Responsibility (CSR) reporting, adding additional structure and rigour to the process for disclosure. It is not the concept of ESG that is challenging, but the speed at which the public and other key stakeholders, including institutional investors and regulators, have endorsed it that creates the greatest issue for companies. It has affected their ability to attract investment, increases costs for borrowing as well as for insurance. This directly impacts a company’s ability to finance and get access to lower-cost capital for their growth and ongoing operations[1].
There are many different disclosure frameworks in place to support ESG improvement and reporting. These include including Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), Task Force on Climate-related financial Disclosures (TCFD), United Nations (UN) Sustainability Goals, etc. with new frameworks being added and changes being made on a regular basis. While there are many different frameworks, many share a common objective of improved performance in one or more of the ESG pillars. This improvement is not intended to be acute, but rather demonstrate continual organizational improvement over time. To effectively meet ESG requirements, companies will have to demonstrate sustained improvements in defined ESG pillars, supported by:
• Defined ESG strategies;
• Established processes and consistent and progressive practices;
• Measurement, reporting, and leadership oversight; and
• Disclosure/Transparency (e.g. public reporting)[2]
As the recognition of ESG continues to grow, so too has the use of management systems, especially in the pipeline industry. Many companies are developing or have developed a management system to support their organization and operations. This is one of the key tools that companies can use to systematically improve their ESG performance. It provides the structure to support effective ESG risk identification, management, mitigation, and reporting, providing the necessary sustained improvement and governance oversight needed. Through a management system plan-do-check-act (PDCA) approach, ESG initiatives can be effectively planned, executed, reviewed, and reported to support ongoing improvement in both ESG as well existing operations.
The proposed paper will discuss the relationship between management systems and ESG how to leverage a management system to support systematic improvements in ESG performance and year-over-year improvement in ESG related metrics.
