The complete guide to ESG consultants: services commerce strategy and impact

In the current business world, ESG has become a key determinant for outcome-oriented, resilient, and sustainable business operations. As the name suggests ESG drives environmental social and governance-related standards to create a more robust business foundation that is both future-ready and efficient. Globally, as stakeholders from regulators to investors expect greater accountability from management, companies that are opening themselves up to ESG compliance are better positioned to manage risks and deliver lasting value for their stakeholders.

ESG is no longer considered just a compliance parameter, instead is now seen as a key determinant of business success. It has been seen worldwide that organizations to focus on ESG are more reputable, effective, efficient, and attract better talent. As such ESG is critical for any organization which is looking to build a foundation for long-term operational growth and success.

What is an ESG consultant?

An ESG consultant brings subject matter expertise in integrating the principles of environmental, social and governance standards into how a business establishes its strategy and overall operations. As the ESG standards gain increasing importance across the globe, these consultants help tailor road maps for organizations in understanding, adopting, and scaling their ESG practices to deliver key outcomes for not only their investors but also other stakeholders. For instance, an ESG consultant may evaluate an organization’s carbon emissions, HR practices, waste management principles, and even governance structures before suggesting different process tailoring exercises that may help prepare reports that are aligned with global ESG standards such as GRI.

Understanding ESG: The foundation of sustainable business

Environmental, social and governance principles now are central to any company which is aiming to operate responsibly and be sustainable in the long run. ESG practices help to set out quantifiable indicators, measurement practices, and overall goals for management to evaluate the true impact. While environmental factors may help decide how a company addresses climate issues, its labour policies will help determine the long-term outcome of its employees and contract workers. Integrating fair and transparent practices through robust governance structures will help create an organization that is built to last. As such the relevance of ESG lies in its core ability to create businesses that are positioned for the future.

This is why investors are now considering ESG metrics as a key filter to assess the long-term sustainability of a firm before making their investment choices. It is seen that companies that have deployed robust strategies not only perform better financially but also build an ecosystem of compliance and goodwill around them. When ESG can be embedded into a company’s core decision-making practices, the ground is already laid for innovation, resilience and long-term success.

Who is an ESG consultant and what do they do?

An ESG consultant typically helps businesses build their tailor-made blueprint by combining best practices across environmental, social, and governance standards. These consultants help to define the overall strategy, processes, and KPIs which are often used to measure the success of an ESG program. The main value that these ESG consultants bring is to align the existing operations of a business with the ESG standards to deliver performance goals, adopt regulatory inputs, and build an overall reputation. Some of the key responsibilities and deliverables of these ESG consultants are as follows.

What is esg consulting? What is their responsibility? Well…

• Environmental: By evaluating a company’s operational impact on the environment covering areas such as carbon emissions and waste management these ESG consultants help to minimize the externality that a firm imposes on the environment.
• Social: By assessing the labor practices of an organization the consultant often boosts the diversity and inclusion metrics by driving better engagement and human resources policy-making.
• Governance: The consultants also provide recommendations in terms of governance structures and operating models which help to create an environment of transparency and better regulatory compliance.

The usual starting point of these consultants is to conduct their own ESG audits and assessments of the ESG risk and deliver a materiality report. Starting with the report the consultant often creates a clear road map outlining the overall ESG strategy and what goals the management should be looking to adopt.

By adopting the recommended processes, a business is better placed to meet its ESG goals. The consultant at this point starts to prepare sustainability reports by incorporating ESG metrics ratings and different disclosures which provide key inputs to compliance outcomes. Last but not the least, consultants are also actively involved in training and change management activities during the length of the ESG program.

Why do companies hire ESG consultants?

Organizations usually lack the expertise that is required to navigate the complexities around environmental, sustainability and governance standards in the current business environment. As the expectations from investors, regulators and other stakeholders become increasingly more challenging to meet it is often found that ESG consultants can help conduct detailed assessments, identify potential risks and deploy mechanisms to drive compliance to global ESG standards.

By reducing potential regulatory risks, building long-term reputation and aligning sustainable operations, these consultants deliver long-term value for the organization. In addition, the consultants help to unlock value by bringing about potential investment that helps the organizations scale their operations.

How to choose the right ESG consulting firm?

Here’s esg consulting meaning:

• A key driver to choosing the correct ESG consulting firm is to look for its core ESG expertise. This would cover areas such as environmental, social and governance compliance. It is best to look for previous client citations to understand the extent of value the consultant has been able to deliver.
• It is also important to understand the sector the consultant has worked in. Deep sectoral knowledge not only helps tailor make ESG practices and processes but also understands potential risks that can be avoided through management actions.
• The next point worth considering is the framework that one needs to adopt. Whether it is the GRI, SSB, or TCFD ensuring that the consulting firm has prior experience in delivering compliance to this framework is a key determinant to the overall success of the ESG program.
• It is often found that every organization has its customized processes and operational nuances. It is best to look for consulting firms who can customize solutions and tailor makes strategies that will help the individual organization meet its other goals in this regard how analytically strong the consultants are and how transparently they can communicate and program manage the ESG exercise is going to be a key determinant in the firm’s overall ESG  compliance.

How ESG consulting services support investors?

• ESG consultants have deep expertise identifying potential risks and recommending mitigation strategies.
• They are able to conduct ESG performance assessments which not only help an organization understand where it stands in terms of ESG compliance but also define the road map to get to the target state.
• ESG consultants are well-positioned to identify ESG-led growth opportunities and can easily spot potential value pockets that companies can explore to drive incremental business. By ensuring regulatory compliance consultants specialising in ESG help to deliver long-term sustainability alignment with stakeholder expectations and investor friendliness.
• The biggest benefit of engaging ESG consultants is holistic, ethical, and futuristic culture creation within an organization. By integrating ESG factors into how the management thinks and how the operations run, the consultants transform an organization’s way of doing business for the better.

Conclusion

In a world that is volatile, complex, and demanding, ESG consultants are pivotal to integrate environmental, social, and governance principles into the way a business runs its operations. By ensuring environmental friendliness, ethical governance and inclusive social standards, ESG consultants help prepare an organization for long term long-term sustainability growth and overall success.

FAQ

How do I know if my company needs yes consulting?

If your company is subject to scrutiny by various stakeholders’ expectations of compliance with regulations and is considering potential investment from ethical investors ESG consulting is appropriate to transform the current operations and make the business more future proof.

How much do ESG consulting services typically cost?

The overall cost of ESG consulting varies from one engagement to another and it is dependent on the underlying scope, complexity, scale of operations and the depth of services required. A broad range worth considering may be from thousand to several thousand dollars depending on how comprehensive the ESG strategies and the resulting exercises need to be.

How do consultants support investment decisions?

ESG consultants often drive important investment decisions by assessing a company’s compliance position with environmental, social, and governance standards, flagging potential risks, and making recommendations on mitigating them. The analysis conducted by these ESG consultants, coupled with their recommendations around process KPIs and compliance with global standards, helps to create the foundation for sustainable and long-term value.