#183 How can ISO Standards help with ESG Compliance?

The ISO Show

ESG compliance has fast become a focus for many organisations looking to address their wider sustainability profile.

However, its broad framework has left many scratching their heads on exactly where to start with evaluating and addressing various elements of Environmental, Social, and Governance compliance.

For those looking for some direction, you may already have a solid foundation in place if you’re certified to one or many ISO Standards.

Today Steph Churchman will explain what ESG is, how it can be scored and what role ISO Standards can play in ESG compliance.

You’ll learn

· What is ESG?

· What scoring systems are available for ESG?

· How can ISO Standards support ESG compliance?

· What ISO Standards can support each pillar of ESG?

Resources

· Isologyhub

In this episode, we talk about:

[00:30] Join the isologyhub – To get access to a suite of ISO related tools, training and templates. Simply head on over to isologyhub.com to either sign-up or book a demo.

[02:05] Episode summary: Steph will be breaking down what ESG compliance means, how ISO Standards can support ESG compliance and give some examples of what ISO Standards can support each pillar of ESG.

[02:50] What is ESG? – ESG stands for Environmental, Social, and Governance. Analysis and evaluation against these three elements help organisations to consider different areas within their overall sustainability profile.

The Environmental section looks at issues surrounding climate change and actions to address an organisation’s environmental responsibility. This includes monitoring and management of your energy consumption, waste management and pollution. It also seeks to tackle how organisations can address, reduce and mitigate their overall environmental impact.

The Social aspect is based around the relationships an organisation has with its stakeholders. This is focused on employees and looks at a broad range of topics including employee wellbeing, fair and competitive pay, benefits and human resource related policies. Considerations can also include wider business relationships such as supplier relations, local community and government work.

Governance criteria focuses on creating a business environment that is fair, transparent, and accountable. Considerations in this area include board composition, fairness in pay structures and executive compensation, business ethics and risk management.

[04:15] An evolution of CSR – CSR (Corporate Social Responsibility) is very similar to ESG, but is less sustainability focused. It also lacked substance in the form of effective and accountable scoring systems that held businesses to account. This is where ESG differs, with many scoring systems, certifications and even mandatory requirements driving businesses to address their compliance.

[04:45] ESG scoring – There are many schemes, scoring systems and certifications available for ESG, some of which are specific to industry sectors and company sizes. What one you pick will be up to you (note that some many be mandatory in select countries), however, here are a few examples:

The S&P Global ESG Score – This assesses a company's performance and management of ESG risks and opportunities using a combination of company disclosures, media analysis, and industry-specific questionnaires. A score of 0-100 is given based on their findings and are relative within a company’s industry sector.

Fitch Ratings ESG Relevance Scores - Fitch Ratings assigns ESG Relevance Scores alongside their traditional credit ratings. These scores assess how ESG factors could impact a company's creditworthiness. Their scores range from 1-5, with 5 indicating the highest ESG relevance to credit risk.

MSCI – They offer ESG ratings for a broad range of companies, it’s not really limited by sector or size. They use a letter grade system, going from AAA-CCC, to assess a company's relative ESG risks and opportunities compared to its peers. The scoring for this one assigns companies as either an ESG leader, average or laggard within their industry.

[06:10] How can ISO Standards support ESG Compliance – It's important to clarify that there's no single ISO standard that guarantees ESG compliance because ESG is a broad framework. However, ISO standards provide a strong foundation for implementing many aspects of an ESG strategy.

[06:35] Supporting ESG – Structure and Framework: ISO standards offer a structured approach to managing environmental, social, and governance practices. This helps companies identify key areas for improvement and develop a systematic plan to address them.

[07:10] Supporting ESG – Improved Performance: By following ISO standards, companies can demonstrably improve their environmental performance, social responsibility, and governance structures by putting in frameworks that align with best practice standards

[07:30] Supporting ESG – Transparency and Credibility: Achieving certification to a relevant ISO standard involves a third-party audit, which verifies that a company's systems and processes meet the standard's requirements. This certification acts as a credible signal to stakeholders such as your investors, customers, regulators, that you’re committed to ESG principles.

[07:55] Supporting ESG – Risk Management: Proactive management of ESG risks is a key component of any ESG strategy. Many ISO standards focus on risk identification and mitigation. For example, ISO 37001 (Anti-Bribery Management Systems) helps identify and address bribery risks, which can have significant financial and reputational consequences. Or ISO 45001 health and safety management, which requires risk assessments to be carried out to ensure the safety and well being of your employees on site locations, which would fall under the social aspect of ESG.

[08:30] Supporting ESG – Competitive Advantage: Strong ESG performance is increasingly sought after by investors and stakeholders. Implementing ISO standards can help companies demonstrate their ESG commitment and gain a competitive advantage in the marketplace. You’ll also feel the benefit of gaining multiple badges, through ISO certification and possibly an ESG score if you choose to go through one of the official scoring schemes.

[08:55] Think of ISO standards as building blocks. They provide the foundation and structure for a strong ESG strategy. By implementing relevant standards and achieving certification, you can demonstrate a dedicated commitment to ESG principles.

[09:50] Join the isologyhub and get access to limitless ISO resources – From as little as £99 a month, you can have unlimited access to hundreds of online training courses and achieve certification for completion of courses along the way, which will take you from learner to practitioner to leader in no time. Simply head on over to the isologyhub to sign-up or book a demo.

[11:55] What ISO Standards can support the Environmental aspect of ESG Compliance?:

· ISO 14001: Environmental Management - This provides a framework for managing environmental impacts, reducing waste, and improving your resource efficiency.

· ISO 50001: Energy Management – this helps companies monitor and optimize their energy use with the aim to help reduce greenhouse gas emissions.

· ISO 20400: Sustainable Procurement – This will help you to adopt sustainable procurement principles and practices within your organisation, by looking at how you can reduce waste, choose more sustainable options for required resources, how you can extend the life of resources available through remanufacturing and recovery of waste, and encourages the use of more innovative products and services.

· ISO 20121: Sustainable Event Management – This Standard is mostly applicable to the events sector, and aims to help reduce the amount of waste produced during events, either through potential energy savings and the production and recycling of resources used during an event. It’s recently had an update, so check out our latest episode to find out what the changes are.

· ISO 14064: Greenhouse Gas Verification – This provides a framework for measuring and managing greenhouse gas emissions. This is a crucial step if you’re working towards Net Zero, as you need to know what your baseline is before you can work on reducing and offsetting remaining emissions.

· ISO 14068: A framework for helping businesses achieve Net Zero, this standard will replace PAS 2060 in November 2025, so anyone looking into PAS 2060 now may be better off going with ISO 14068 as it includes more guidance on purchasing credible carbon credits.

[14:15] What ISO Standards can support the Social aspect of ESG Compliance?:–

· ISO 26000: Social Responsibility – which offers guidance on integrating social responsibility practices throughout your organization.

· ISO 45001: Occupational Health and Safety Management - which helps companies create a safe and healthy work environment. It provides a robust set of requirements designed for improving workplace safety in organisations and supply chains, with the aim of reducing workplace injury and illness.

· ISO 45003: Psychosocial Health & Safety Management aka Mental health in the workplace. For the last 4 years or so, work related stress, depression and anxiety has been the leading cause for work related ill-health cases and lost working days. That’s according to the annual HSE reports, which clearly highlights a big issue that many more need to consider and address.

[14:15] What ISO Standards can support the Governance aspect of ESG Compliance?:–

· ISO 9001: Quality Management – this is the leading global ‘quality mark’ for businesses and designed as a vital business improvement tool. It’s quite simply A blueprint for running your business successfully.

· ISO 22301: Business Continuity Management - Which provides a basis for planning to ensure your long-term survivability following a disruptive event. This is a Standard that many align with, but don’t always certify to, and for good reason as it provides some invaluable guidance for establishing robust Business Continuity Plans.

· ISO 27001: Information Security – This is a Standard that is common place for most sectors now, given how reliant we all are on tech. ISO 27001 will help you to implement an Information Security Management System (ISMS), which is a systematic approach to managing sensitive company information, ensuring it remains secure and available. It encompasses people, processes and IT systems.

· ISO 37001: Anti-Bribery Management Systems - It’s the International Standard that allows organizations of all types to prevent, detect and address bribery by adopting an anti-bribery policy, appointing a person to oversee anti-bribery compliance, training and carry out risk assessments.

· ISO 44001: Collaborative Business Management – This was originally a British Standard that had been created to provide a framework for creating and managing collaborative business relationships between organisations. The standard promotes the best way for businesses to work together, thus effectively developing and managing their interactions with each other for maximum benefit to all.

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