Common headaches for ESG teams - CSRD Advice

Common headaches for ESG teams



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What are the main challenges when implementing a new ESG strategy?

In the corporate world, the field of ESG (Environmental, Social and Governance) is of ever-growing importance. In addition to increasing pressure from investors and consumers, companies must comply with more regulations and directives, making ESG compliance a legal imperative. Fortunately, most forward-looking companies now understand that today, a firm commitment to good ESG practice is a must.

Indeed, a company that takes good care of its local and extended environment, is attentive to social concerns, and practices good corporate governance is well on its way to sustainable business growth. We also know, however, that these fields present major challenges. In this article, we examine some of the most common headaches for ESG teams, discuss potential solutions, and examine why a greater focus on ESG is the right way forward.

Business challenges

Of course, for any leadership group working on formulating an ESG strategy, one of the first priorities is to assess challenges related to its main business activities. Only once these have been resolved will it be possible to effectively implement ESG best practices across the board.

A shift in culture: A genuine commitment to ESG necessitates a distinct culture change, as the company looks to place greater value on aspects that are not directly related to profit-making. Clear communication and strong advocates are needed to explain the importance of ESG to the long-term viability of the organization.

Transparency and accountability: Empty words about caring for the environment or society are no longer sufficient. Instead, consumers, investors and other stakeholders expect transparent processes and accurate, objective data demonstrating genuine progress and accountability.

Forming sustainable partnerships, lowering Scope 3 emissions: Companies who are genuinely committed to greater sustainability have to look not only at their own activities, but that of their partners. In this area, targets should include lowering Scope 3 emissions, i.e., indirect emissions in a company’s value chain.

Suppose a manufacturer has a carbon-free production plant, but the supplier that produces most of their raw materials is pumping thousands of tons of CO2 into the atmosphere. In that case, they will still be open to criticism. This is why it is necessary to make a detailed assessment of the entire value chain and to always bear ESG concerns in mind when selecting new partners.

Tracking stakeholder sentiment and organizational reputation: Another difficulty is measuring and gauging stakeholder sentiment and the company’s reputation as a whole. The ESG team is typically responsible for eliciting stakeholder feedback from a wide variety of sources, comparing against benchmarks and targets, and adapting stakeholder engagement policy.

Ensuring greater diversity and inclusion: This is a challenge for HR, in particular. Summarized in the US as Diversity, Equity, Inclusion and Access (DEIA), this aspect of ESG places a strong emphasis on hiring a diverse range of people from various backgrounds and creating a workplace where everyone feels welcome and comfortable at all times. It is also an excellent opportunity for growth: countless studies have shown diversity to be a key factor in successful teams, and that an inclusive and diverse workplace is highly attractive to employees.

Learn more about the technical and regulatory challenges 👉

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Common headaches for ESG teams

Some of the most common headaches for ESG teams, potential solutions, and why a greater focus on ESG is the right way forward.
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A CSRD-vel és az ESG-vel kapcsolatos legfontosabb terminológiát itt gyűjtöttük össze. A szójegyzék rövid és érthető magyarázatot ad a gyakran használt kifejezések jelentéséről.


The most important terminology related to CSRD and ESG has been collected here. The glossary provides a brief and understandable explanation of the meaning of these frequently used terms.