How ESG Reporting Impacts E&C Training in 2023

As the importance of Environmental, Social, and Governance (ESG) performance continues to grow worldwide, organizations face challenges not only to define what ESG means to their business, but also how to manage its wide-ranging impact:

• Regulators are amping up their focus on ESG with increased disclosure requirements.
• Investment decisions and board changes are being made based on ESG practices.
• Employees and customers are making decisions based on shared values.

Organizations around the world and across industries are determining how to implement and report on ESG. Ensuring your business values, ethics, statements, commitments, relationships, and transactions are aligned with current and future ESG requirements is a complex issue and will have a significant impact on your ethics and compliance training.

In a recent webinar, Key Drivers for Your E&C Training in 2023, SAI360 compliance experts Jon Bricker, VP of Sales, AMER Learning, and Julie Murphy, Sales Director, EMEA Learning, discussed how you can align your training with ESG reporting requirements to yield real benefits.

Key ESG Trends

It’s getting tougher to monitor compliance risks and prepare your workforce for what comes next. This is a critical time to stay on top of key ESG focus areas that directly impact training. Here are some emerging ESG trends to consider in your 2023 Ethics and Compliance (E&C) training plan:

Carbon neutral becomes carbon zero

The move from carbon neutral to carbon zero is driven by numerous governmental initiatives to reduce carbon footprints, and by consumer demand. Businesses need to take more significant steps to reduce or eliminate carbon in their operations and supply chains. It’s beneficial to give employees an opportunity to participate in company environmental initiatives—like recycling, ridesharing, and reducing printed materials—where they can have a measurable impact and are rewarded for doing so. These activities create goodwill and can boost positivity in your corporate culture.

Climate change

Extreme weather across many regions of the world—flooding, bush fires, heatwaves, and more—highlight the real strain climate-related events can have on supply chains. These destructive (and costly) crises can put a real strain on business continuity teams that are tasked to keep daily operations up and running. Businesses need to incorporate climate-related risks into decision-making processes and use data analytics to:

• Develop more effective business continuity processes and procedures
• Train people who work in areas of potential natural disasters to have the competencies needed to perform their jobs in extreme conditions
• Develop simulation workshops which include scenarios to work through emergency situations as they happen
• Build online training to use when natural disasters strike

Supply chain resilience

The ongoing effects of the coronavirus pandemic, Brexit, and the conflict in Ukraine highlight the importance of having a resilient supply chain that can withstand disruptions. Recent legislation in Europe is shifting from typical supply chain due diligence issues, like anti-bribery and corruption, to more environmental and social issues. The German Supply Chain Act, for example, imposes a range of “due diligence obligations aimed at reducing human rights risks posed by global supply chains.”

This emphasizes the need to review how to train and communicate with your suppliers. Although training third-party suppliers may sound daunting, it can be built upon the workforce ethics and compliance training you’ve already established, including developing a Suppliers Code of Conduct.

Social impact of investments

An accurate portrayal of a company’s social performance is crucial to gaining the trust of both investors and consumers. This issue is particularly important in Europe, where the German Supply Chain Act requires companies to have a Human Rights Officer and a human rights policy.

Your internal teams and supply chain must all be trained to identify and manage human rights violations, including issues surrounding child labor laws, ethical sourcing, etc. Uber, for example, trains its employees on human trafficking since the company’s drivers may witness it first-hand. It’s crucial to examine ways to get employees invested in social issues.

 Automating ESG reporting

As more companies adopt digital reporting practices, the most convenient way for companies to share their ESG data with investors is through automated reporting to ensure timeliness and consistency. You can use that reporting to identify risk areas and inform training activities.

Speak up culture

Encouraging your workforce to report issues also applies to your supply chain. Communication and education about your organization’s reporting processes and hotline availability need to be accessible to external stakeholders and third parties.

Home working

While working at home benefits work/life balance and contributes toward carbon neutral operations, it heightens the need for ongoing training on ethics and compliance, company culture, and cybersecurity.

To learn more, register here toview the complete Key Drivers for Your E&C Training in 2023 webinar.  

Critical Elements of ESG Reporting

As ESG reporting evolves, here’s a list of guidelines your organization should consider putting into practice:

• Communicate your ESG commitment to all employees from the top down
• Promote the importance of ESG considerations throughout all aspects of the business
• Reinforce ESG as an integral part of daily operations through clearly defined policies, training programs, and more
• Ensure your Code of Conduct and E&C policies align with ESG goals and reporting requirements
• Incorporate ESG targets into your Code of Conduct
• Encourage sustainable practices among employees
• Promote employee-centric initiatives, like incentives for carpooling or taking public transportation, providing recycling bins throughout the office, and establishing energy-saving policies
• Conduct regular reviews to ensure ESG reporting processes align with training and communications and make revisions when necessary
• Pinpoint areas of potential high-risk—such as your supply chain—for additional training to help identify and manage labor, human rights, and environmental violations
• Implement third-party training to ensure your suppliers and business partners uphold your organization’s values when conducting business on your behalf

3 Ways to Improve Your ESG Report Card

Finally, aligning ESG reporting with your training program is a critical part of reaching your 2023 goals. Here are three ways to ensure your organization is headed for success:

1. Ensure board visibility: Leadership needs to be invested. Robust ESG programs attract investors and offer a framework to mitigate business risk and future-proof the business.

2.  Allocate more funding: Have the resources to get the job done right. Accounting and consulting firms are building capability and capacity for ESG advisory services, so tying ethics and compliance training programs to ESG ensures you can tap into a larger budget pool.

3.  Organizational clout: Ensure ethics and compliance training is a strong complement of, and contributor to, ESG initiatives and elevates its importance across the organization.