We continue our series on pragmatic ESG advice for SMEs. In this article, we move onto the final stages of the “plan, do, check, improve” tool that you can use to identify and manage the environmental and social (E&S) impacts of your business and enhance your E&S benefits.
In our last article, we covered the ‘doing’ stage. We took you through how to decide who in your company will be responsible for overseeing progress on E&S issues, and how to use action plans (along with a template) to implement E&S initiatives. Once you have completed those two steps of planning and doing, you can then move on to the ‘checking’ stage – monitoring and reporting.
The Checking Stage
Step 5: Monitoring
To monitor your progress on E&S issues you will need data. The data you need and how often you need to collect it depends on what environmental and social impacts you’re trying to improve.
If you’re trying to reduce your carbon emissions, then you should keep a spreadsheet of your energy usage which is updated weekly or monthly to track your progress over time. We would recommend talking to your energy supplier about getting a smart meter installed which will give you precise and real-time data.
There are systems that will automatically upload your energy usage into a spreadsheet. You can also do this manually through meter readings and utility bills. Then use free tools, such as the Carbon Trust’s carbon calculator, to convert your energy usage into GHG emissions.
Perhaps one of your goals is to increase the number of women in senior management roles. In which case, you would collect data every quarter. Again, the easiest way to do this is to keep a spreadsheet which breaks down salaries, recruitment, and promotion rates into gender categories. The Australian Government has some useful tools and templates including excel spreadsheets that help smaller businesses keep track of this data.
The key point is, to effectively monitor, you need to know what sort of data you need to collect for each E&S risk/opportunity. Consider how often you will collect this data and who is responsible for collecting it. We have created a template to help you do this.
Another useful way to monitor your progress on E&S issues more generally is to gather feedback from employees. Check they clearly understand your company's goals and the actions they may need to take. To collate this, consider sending out surveys and questionnaires. Many E&S initiatives, such as improving recycling or introducing a ‘switch off’ policy, require the efforts of the whole team so it’s important to ensure employees are on board and feel involved in the process.
Step 6: Reporting
Once you have put in place all the previous steps you should report and publicise the goals you have set, the actions you are taking, and the progress you are making.
By reporting we don’t necessarily mean reporting against ESG frameworks and standards (of which there are now hundreds). Reporting against these frameworks, such as B Corp or GRI, can be complex and time-consuming. For smaller businesses that are just starting, we would recommend having a page on your website dedicated to sustainability.
For example, Crystal Doors (a door and window manufacturer in Rochdale) have a page dedicated to sustainability which details what they are doing, why they are doing it, and their progress so far. Meanwhile, UKOS (a stationery and office equipment supplier) have a page dedicated to energy efficiency which details the actions they are taking, such as encouraging car sharing and introducing a CycleToWork scheme, and the results of those initiatives.
Whether in a report or as a page on your website, some top things to include are:
Your priority areas: Highlight the environmental and social issues that you have chosen to prioritise (this is step one in the planning stage). For example, reducing energy inefficiencies in your building/office might be one area.
The actions you are taking: Describe the actions you are taking to address your prioritised E&S. For example, you may have chosen to replace some of your halogen lights with LED ones, introduced motion sensors, or initiated a simple ‘switch off’ policy. No matter how big or small, tell your stakeholders what you’re doing.
Your goals: Identify your targets for each prioritised E&S issue. For example, you might be aiming to reduce your GHG emissions by 50% by 2025, or to increase the number of women in senior management roles by 30% by 2025.
Your progress: Describe your progress towards your goals. For example, by replacing some of your halogen lights with LED ones and introducing a CycleToWork scheme, may have reduced your GHG emissions by ‘x’ tonnes of CO2 within a one year period.
The proof: The best way to ensure credibility is to include verifiable data and case studies with your statements. This means you need to measure and keep track of your progress.
The money element: Highlight how your E&S initiatives have saved the company time and/or money. This element is particularly appealing to employees and investors as it helps them see the value of sustainability to the business. For example, over the last 12 months your energy bill may have fallen because of your new energy efficiency measures.
The good and the bad: Make sure you avoid greenwashing by being transparent about your progress and open about the challenges you may have faced. Be sure to set realistic targets, especially when starting out. You’ll need to work out what environmental initiatives you can afford to implement and how much those initiatives will reduce your carbon emissions by. No one is expecting you to be NetZero by 2025. So celebrate your success but also discuss where your performance against targets may have been poor and the actions you’re taking to rectify that.
Other things to think about:
Link your actions to a larger narrative by describing how your E&S initiatives relate to the United Nation’s Sustainable Development Goals (SDGs). For example, if one of your goals is to increase the number of women in senior management roles then you are contributing towards SDG 5 on Gender Equality.
Consider translating your progress into headlines that are easier to understand. To customers, saying you reduced your CO2 emissions by 30 tonnes means very little. Instead, consider framing it in terms of how many flights to New York that equates to. For example, your energy savings may be equivalent to 18 New York to London flights, or you may have water savings equivalent to 204 households’ monthly water consumption.
Think about your audience. Investors will be most interested in data, tables and charts, while case studies and stories will be more appealing to customers and employees.
Show real commitment, not just compliance. Consider starting with a CEO statement and statements from other employees about why sustainability is important to the company and to them as individuals.
Written by Rosalind Kainyah MBE, an authority on Sustainability and responsible business with over 30 years of combined legal, international, executive and board level experience, and Helen Stickler, Co-Founder of Triplo ESG.