Mapping ESG Strategy to Plan-Do-Check-Act

Joy Inouye
Joy Inouye
December 8, 2021
Sponsored by: Enablon Wolters Kluwer
Mapping ESG Strategy to Plan-Do-Check-Act
The topic of environmental, social, and governance (ESG) factors has increasingly been getting more traction and attention from the world’s leading companies, investors, and consumers. More companies like yours are looking for the best way to establish and implement actions and strategies related to ESG, managing and evaluating these efforts in similar ways to other management system activities. What you need is a process to guide your ESG activities and to know if they are achieving the desired outcomes and enhancing your business performance.

Plan-Do-Check-Act (PDCA) is a concept illustrating the continuous improvement cycle, which can be applied to many processes, including the implementation of many types of management systems in compliance with different standards. By following PDCA, you can effectively manage and continually improve organizational effectiveness in driving your organization’s ESG efforts. This post briefly describes how you can map your ESG strategy and management plans to the PDCA model.

Key Actions for Plan-Do-Check-Act

Subject matter experts and sources sometimes differ on which actions fit under the different stages of Plan-Do-Check-Act, but this post outlines the basic key actions for mapping ESG strategy that should be considered at each stage.

Plan Stage

The overall objective of the Plan stage is to define your ESG policies, material issues, objectives, and targets. This follows with specific actions.

Understand the impacts of organizational activities, products, and services. Determining the double materiality issues (impacts outwards and inwards) of your organization’s activities helps you understand the context of your organization and the needs and expectations of key stakeholders.

Ensure leadership involvement and determine level of leadership commitment to ESG. Leaders should be involved in defining your organization’s ESG policies and guiding the identification of roles, responsibilities, and relevant authorities for executing on ESG strategy.

Identify ESG risks and opportunities. This includes understanding your compliance obligations with various ESG reporting frameworks, and establishing plans to address these compliance obligations.

Set goals and objectives for improvement. After identifying your opportunities for ESG, the next step in the Plan stage is to set goals for your organization to improve its ESG performance, establishing indicators to monitor your progress against objectives and targets.

Do Stage

The main objective of the Do stage is to implement and put into action your ESG management system. Here are the key actions to consider.

Assign and make available necessary resources to follow through on ESG action plans. This includes resources like budget and equipment/computing tools, and also appointing team members to report on organizational performance.

Establish operational controls to ensure proper functioning of ESG activities and projects. Setting up procedures for operational controls minimizes any negative effects on your organization, your supply chain, customers, the environment, and the community. This includes establishing plans for emergency preparedness and shoring up your operational resilience. Set up training courses for employees on your ESG strategy. Training courses or presentations keep your workers aware of corporate ESG policies and goals, and help them understand how their actions play a part in achieving these goals. Establish procedures to ensure robust internal and external communication. Communication within your organization is critical for executing on your ESG activities, and communication with external parties is key for meeting and exceeding stakeholder expectations.

Check Stage

The overall objective of the Check stage is to measure, review, and evaluate your organization’s performance on its ESG activities. The specific actions of this stage are:

Maintain proper documentation to record performance for measurement and evaluation. Doing so helps you regularly evaluate performance against compliance criteria and your ESG goals. Conduct regular internal audits to review your ESG activities to confirm they are meeting planned arrangements and are on track to meet performance goals. Set up management reviews of performance evaluations and internal audits to identify successes and opportunities for improvement. Benchmark performance at various levels, for example between different sites, with other peers in your industry, or with past baselines.

Act Stage

The main objective of the Act stage is to keep your organization on the path of continuous improvement by revisiting your ESG activities and ensuring they remain valuable and relevant to your organization. These are the actions to consider.

Establish procedures to identify, investigate, evaluate, record, and review corrective and preventive actions. Adjust resources if targets have not been met and establish new targets if current ones have been met. Identify and prioritize areas of improvement. This allows the PDCA cycle to begin again with the foundations for continuous improvement in your ESG performance.

Overcoming challenges for continuous improvement in ESG

There can be several challenges in following the steps and key actions of the PDCA cycle. Surveying stakeholders about their material concerns takes time, as can securing the support and commitment from your leadership to head ESG efforts. Collecting the relevant ESG metrics can be a challenge as it requires the proper human, technology, and financial resources to ensure timely and accurate collection. Once you have collected your metrics, there is the additional hurdle of analyzing the data to gain insight into how well your organization is performing on its ESG goals, and which actions to take depending on performance levels.

Despite these challenges, the benefits of following the PDCA cycle to manage your organization’s ESG efforts are several. It provides a step-by-step guide to managing ESG strategies that can be explained to teams with minimal instruction and training, and it fosters collaboration and communication among teams as they work together to execute your ESG strategies. Using PDCA for ESG helps you efficiently determine which actions and efforts are producing the desired results, and quickly implement corrective actions when necessary. Most importantly, the PDCA cycle stimulates continuous improvement of your ESG plans so your organization can maintain (or accelerate) its overall business performance.

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About the Author

Joy Inouye
Joy Inouye
Enablon

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