The ESG Perspective: Integrating Environment, Governance, and Stakeholder Value

The concept of ESG was initially introduced in the "WHO CARES WINS" report released by the United Nations in 2004. Today, it serves as a means to assess and appraise the overall performance of businesses in their operations and management. ESG has evolved into a more comprehensive and unbiased tool for analyzing data.

Unlike past risk assessment endeavors that concentrated solely on financial matters, ESG indicators encourage companies to prioritize intangible assets, sustainable growth, and ongoing operations. Several projects in the realms of Environment (E), Social (S), and Governance (G) have gained considerable attention. For instance, within the Environmental (E) aspect, there is a strong emphasis on environmental preservation.

E (environment) environmental protection

▋Related to the environment : such as energy management, raw material management, product packaging, reduction of waste and pollution, land utilization, etc.
▋Greenhouse gas emissions and climate change : such as: greenhouse gas (GHG) emissions, climate change risks, etc.
▋Environmental risks : For example, compliance with environmental protection regulations, etc.
▋Environmental protection opportunities : For example, passing environmental certification, etc.

S (social) social responsibility

▋Customer benefits: such as product quality management, customer rights, etc.
▋Labor relations: such as employee care and labor-management relations, workplace friendliness and diversity balance, etc.

G（governance）Corporate governance

▋Corporate governance: For example, transparency in business conduct, shareholder rights, diversity and structure of the board of directors, business ethics, etc.
▋Corporate behavior: For example, corporate compliance with corporate regulations, corporate audit report certificate, etc.
▋Risk management: such as information security management, operational risk management and financial risk management, etc.
▋Suppliers: such as supplier/chain management, etc.

When implementing ESG, what are the key items to pay attention to?

Enterprises have limited resources. Before making any plans, they should first think about what results they want to achieve in the future, and ESG is no exception. The following integrates the key points and characteristics of ESG that companies need to confirm when carrying out digital transformation and smart manufacturing, and summarizes the key points that should be paid attention to before implementing ESG.

Stakeholders value the project

There are many stakeholders faced by enterprises, mainly including customers, banks and government regulations of various countries. For example, what are the ESG-related requirements of key customers for the supply chain? Regional regulations related to operating trade are regularly updated, the conditions of investment and financing banks in approving loans, and the regulations of government agencies where the enterprise is located.

Develop ESG blueprint and milestones

Similar to the blueprint planning for digital transformation and smart manufacturing, when designing the ESG blueprint, we must first understand the key points that each stakeholder pays attention to, and integrate the company's characteristics and operational performance goals. Only then can we have the basis to carry out measures that will have substantial benefits for the company. ESG strategy blueprint. The blueprint should specifically define the ESG milestones to be achieved in the short, medium and long term. And remember to integrate ESG performance with corporate operating performance in order to achieve the expected results effectively.

ESG design for the entire value chain

The concept of ESG should be incorporated into all services, from product design, supply chain manufacturer status, selection and use of raw materials, process optimization, warehousing and distribution methods, and even recycling design, all need to be considered as a whole.

ESG requires all stages of the entire product life cycle/service process to be completed in concert. External supply chains and cooperative vendors also need to be required so that all relevant links can practice ESG together.

Build internal consensus from top to bottom

After the company confirms the ESG strategic blueprint and milestones, in addition to establishing a main dedicated ESG unit internally, the company's senior management should take the lead and announce to internal employees that it is determined to implement ESG, so that every employee in the company knows that all employees People's affairs build internal consensus.

ESG covers a wide range of areas, and there must be a period of pain. To implement ESG in an enterprise, it cannot be accomplished by a small group of people within the organization. The DNA of ESG should be poured into the hearts of everyone in the entire company to truly achieve the goal. .

Information exposure structure that complies with international standards

Use the company's objective performance data information to confirm ESG implementation results, so that the market, investors, or consumers can understand what ESG goals the company has achieved. Only by clear and specific information disclosure can the company's achievements in various aspects of ESG be actually demonstrated. In the "Corporate Governance 3.0-Sustainable Development Blueprint" recently released by the Financial Supervisory Commission, it is mentioned that "improving information transparency and promoting sustainable operations" is one of the main thrusts.

The Financial Supervisory Commission currently regulates listed companies. When preparing the 2022 sustainability report, they should refer to the information structure of TCFD (Task Force on Climate-related Financial Disclosures) and SASB (Sustainability Accounting Standards Board). Only by using internationally recognized standards to disclose ESG information can everyone believe that ESG is not just a slogan, but the result of actual corporate efforts.

Integrate ESG with corporate strategies to simultaneously carry out digital transformation

Extreme climate change, the epidemic, and various factors have made global trade conditions continue to be turbulent. ESG may be a crisis or a turning point for companies. By planning and implementing various ESG indicators and improving corporate operations and risk management, you will have the opportunity to stand out in the fiercely competitive international battlefield.

When companies implement ESG, they can consider opportunities to simultaneously utilize digital transformation. The manufacturing industry can also achieve a more comprehensive layout through smart manufacturing, and can use system software tools to assist in different aspects of ESG.

For example, in terms of environmental protection, through the assistance of system tools such as energy management and carbon inventory , companies can improve production efficiency and achieve ESG goals more efficiently through information transparency from top to bottom.

Industries are very different, so different industries have different carbon reduction methods.