More blog items

Environmental, Social and Corporate Responsibility

In our latest blog post we look at the hot topic of ESG. What it is, what mandatory reporting requirements there are and how Insight Security is voluntarily embracing ESG requirements.

What is ESG?

The abbreviation ESG refers to Environmental, Social and Governance. Enterprises have been paying attention to these aspects of their business operations for a long time, but this has developed into ESG reporting that’s now becoming a legal requirement for many businesses and an important voluntary requirement for many more.

ESG standards and reporting are used to assess a business based on sustainability and environmental factors, impact on people and society along with transparency and accountability. Developing an ESG strategy demonstrates that a company is reducing risks, balancing economic and societal needs as well as paying attention to how the business behaves and how it’s perceived.

Businesses that pay attention to ESG requirements are more likely to attract both investors and employees as well as valuable customers and clients. People see ESG compliance as an essential element for business growth as companies and consumers increasingly consider environmental, social and governance issues along with fair pay and taxation for employees.

Three Pillars of an Effective ESG Strategy

An effective ESG strategy needs to focus on environmental, social and governance issues and these define the three pillars of ESG.

Environmental Pillar

The environmental pillar is focused on an organisations impact on the environment. This aspect not only covers the businesses products and services, it also encompasses supply chains and operations. The energy and resources used by a business along with emissions, pollution and carbon footprint are all essential aspects of this pillar.

Sensible environmental practices include using renewable energy sources and working toward becoming a net zero organisation, using sustainable and biodegradable packaging, taking steps to reduce carbon emissions, reducing the amount of waste, promoting recycling and developing more environmentally friendly products and services.

Paying attention to the implementation of valuable ongoing environmental policies is recognised as essential. Claiming to be ‘going green’ while doing nothing beneficial will inevitably damage a companies brand and reputation.

Social Pillar

The social pillar is all about how a business supports people, the wider society, employees and the workplace culture. The social pillar includes paying attention to supply chains, relationships with suppliers, partner organisations and service providers.

Demonstrating equal opportunities, diversity, inclusion and vigilance about the possible use of slave labour in supply chains is vitally important. Its also important to show adherence to health and safety standards, fair pay, employee wellbeing and working conditions.

Sensible business practices that fall under this pillar include providing staff training, ensuring adherence to health and safety standards, making certain products and services are safe, keeping customer data secure, preventing abuse and exploitation in the supply chain and investing in local community projects.

Governance Pillar

The governance pillar is all about how a business is governed and managed. It refers to decision making processes, reporting procedures, adherence to ethical standards, transparency and accountability.

 The governance of an enterprise is clearly essential to the businesses management of environmental and social factors. The decision-making processes followed by an organisation need to be clearly defined, open and transparent.

Exemplary governance within a business includes preventing bribery and adhering to ethical business practices, ensuring diversity in the business leadership, openness about executive pay and rewards, ensuring accountability for business leaders and accurate reporting of all aspects of business operations, including strategy and financial performance.

ESG Reporting

ESG awareness and regulation is evolving and continuously developing, making it tricky for businesses to know exactly what they need to do. ESG reporting is focused on disclosing information covering each of the three ESG pillars: environmental, social and corporate governance. ESG reports are important for consumers who want to know if a companies values align with theirs. And these reports are also essential for investors, who seek information to enable them to screen and select investment opportunities, along with prospective employees who, like consumers, want to make certain a companies values and ethos aligns with their own.

Some forms of ESG disclosure are mandatory. These include the following.

Companies Act 2006

The Companies Act 2006 applies to all UK companies. All medium and large companies are required to provide details of key risks and uncertainties the company faces, as part of the directors’ report.

These documented risks might include environmental and social elements, if relevant to the business. This aspect is particularly important for enterprises impacted by climate change risks and those operating in carbon-intensive industries.

Large companies must prepare a section 172 statement that focuses on stakeholder engagement and ensures stakeholders are always considered in decision making processes. The section 172 statement is required to address the impact the business has on the environment as well as relationships with suppliers and the environmental impact of the companies supply chain.

Streamlined Energy and Carbon Reporting (SECR)

This reporting is a mandatory requirement for quoted companies, large unquoted companies and large limited liability partnerships. Unquoted companies that must fulfil this mandatory reporting need to meet two of the following three criteria:

1. Have and annual turnover of more than £36 million,
2. Balance sheet total assets greater than £18 million or
3. More than 250 employees.

SECR requirements include reporting total UK energy usage (if greater than 40MWh) along with associated greenhouse gas emissions. There is also a requirement to disclose information about energy efficiency and optimisation actions taken in the businesses financial year. Organisations must also disclose the methodologies used to carry out the required calculations.

These SECR disclosures must be included within the annual directors’ report. It is worth noting that the requirements for quoted companies differ from those that apply to unquoted companies and LLPs.

Climate Related Financial Disclosure Regulations 2022

Companies must include climate-related financial disclosures in the non-financial and sustainability information (NFSI) statement that’s included within their strategic report. For organisations not required to prepare a strategic report, the disclosures should be included in the Energy and Carbon Report instead.

The Climate-related Financial Disclosure (CRFD) Regulations came into effect for certain companies as of the 6th of April 2022. These CRFD requirements are mandatory for:

• Public interest entities (businesses considered to be of public interest due to size, operations or nature).
• UK registered AIM (Alternative Investment Market) listed companies with more than 500 employees,
• UK registered companies with more than 500 employees and turnover exceeding £500 million, and
• Traded or banking LLPs with more than 500 employees or LLPs with more than 500 employees and turnover exceeding £500 million.

These organisations must report climate-related information covering governance, strategy, risk management, metrics and targets. The overall aim is to prompt businesses to carry out detailed analysis of the climate-related risks and opportunities they face.

Corporate Sustainability Reporting Directive (CSRD)

The CSRD primarily affects EU companies but the range of businesses affected is set to increase over forthcoming years. Non EU businesses that have over €150 Million turnover withing the EU will be required to meet this directive as of 2026.

The CSRD requires data-focused sustainability related information to be disclosed.

Modern Slavery and Gender Pay Gap Reports

Many companies already adhere to requirements regarding the Modern Slavery Act 2015 and the Equality Act 2010. These are important aspects of mandatory ESG-related reporting.

The Modern Slavery Act 2015 requires businesses supplying goods or services, with a turnover greater than £36 million, to present a modern slavery statement. This needs to focus on modern slavery both in the business and supply chain.

The Equality Act 2010 requires businesses with more than 250 employees to calculate and disclose annual gender pay gap details.

Voluntary ESG Reporting

While voluntary ESG reporting and disclosure is not essential, openly providing this information can significantly boost trust, show transparency and demonstrate a clear commitment to sustainability. Companies also need to be aware that mandatory aspects of ESG reporting are likely to escalate over forthcoming years so it makes sense to be prepared.

Voluntary ESG reporting is great for an organisation’s reputation and can provide a competitive advantage. The sustainability efforts made by a business can be a key factor in attracting and retaining staff as well as encouraging staff loyalty. And prospective customers and clients increasingly want to only do business with organisations that have a responsible attitude to environmental concerns, people and corporate management. 

Importantly, voluntarily compiling and publishing a sustainability report enables companies to accurately assess their environmental and social risks, helping them anticipate needs, take appropriate action and ensure long term stability.

Insight Security - Committed to Corporate and Social Responsibility

Here at Insight Security we’ve always focused on ethical business practices, environmental stewardship and ongoing support of the communities in which we operate. Our business ethos has always been “Customer First” and is based on our belief that in order to be successful we need to maintain a foundation of integrity, transparency and respect for people and our environment.

We recognise that ESG provides a valuable structured framework that supports monitoring and reporting and we understand how transparency is an essential element. Follow these links to learn how Insight Security is actively and voluntarily engaging with ESG requirements.

• Embracing ESG at Insight Security 
• Corporate Responsibility at Insight Security 
• Social Responsibility at Insight Security 
• Insight Security Carbon Reduction Policy Statement 

If you have any questions about security solutions, or if you have any special requirements, remember we are here to help. Give us a call on 01273 475500 and we’ll provide you with free, expert advice.

This message was added on Thursday 26th September 2024