ESG INTEL
...On Identifying Weak Links in Your ESG Program
Written by Hussein Sayani
Environmental, Social, and Governance (ESG) disclosures have evolved beyond reporting operational metrics like carbon emissions, employee professional development, and board diversity. Today's corporate disclosures encompass an increasingly complex landscape of climate-related risks, opportunities, and targets. Yet companies often focus exclusively on external risk factors such as extreme weather events and shifting markets, neglecting internal policies and practices. Here are some potential—and surprising—weak links in your ESG program:
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Missed Opportunities in the Management Chain
Companies often make significant investments at upper management levels to ensure ESG disclosures accurately represent company policies. However, this commitment often fails to cascade down the management hierarchy, leaving lower tiers misaligned with the company's ESG stance.
This problem can manifest itself when well-intentioned employees with limited knowledge of their company’s ESG program respond to an ESG information request incorrectly or inconsistently with company policy—resulting in consequences ranging from reputational damage to regulatory breaches.
The Need for Robust ESG Training
In today's ESG-focused environment, it is vital to equip procurement and sales personnel with comprehensive knowledge of ESG concepts and company-specific policies. Establishing clear boundaries regarding the ESG disclosures and commitments they are authorized to discuss is paramount to maintaining regulatory compliance and avoiding unnecessary exposure.
The importance of cohesive, company-wide ESG policies and comprehensive staff training should not be minimized, as ESG disclosures play a crucial role in corporate reputation and compliance.
Langan’s ESG team specializes in identifying program gaps and providing tailored solutions, ranging from training and policy alignment to ESG strategy and disclosure support. To discuss how Langan can assist you in your ESG journey, contact your Langan Project Manager or the ESG advisory team:
Until recently, demands made by customers and investors to disclose ESG information were infrequent and typically directed toward upper management. The surge in supply chain carbon disclosures and ESG disclosures overall, however, has led to a substantial increase in ESG-related inquiries at the procurement/sales level. In response, some companies now include these requests in their purchase orders and general terms and conditions.
Sales staff are incentivized to achieve two objectives: customer satisfaction and sales growth. Without training on a company’s ESG policies, employees are unequipped to handle the increasing volume and complexity of ESG-related inquiries accompanying purchase orders. Consequently, they may accidentally provide inaccurate data, divulge confidential information, and overstate ESG goals. This oversight can lead to substantive unauthorized disclosures amounting to SEC regulation breaches, particularly for public companies.
The Increasing Role of ESG in Sales Discussions
Leslie Wong
Senior Associate
lwong@langan.com
Hussein Sayani
Senior Project Manager
hsayani@langan.com
