Two Dimensions of Quantifying Environmental and Social Governance (ESG) Value

​Clearly there is a growing need/desire to quantify the value ESG creates for organizations engaging in sustainability programs. Investors, governmental representatives, citizens, and others want to understand in a clear and concise manner the performance of sustainability efforts and return on investment.
 
From my perspective there are two dimensions to this challenge. The first one is focused on understanding the financial implications of sustainability initiatives relative to the efficient use of resources, employee wellness, and social equity. The Sustainability Metrics Calculator is a tool designed to address this dimension. The calculator translates environmental and social actions into financial terms. The outputs depict the competitive effects of sustainability efforts. The data analytics establish a benchmark confirming current activities or the need to improve the management of environmental impacts and employee/social initiatives for more synergy and greater return on the investments.
 
The second dimension is quantifying the ESG value that is being created by an organization.  One way to think about this dimension is to acknowledge that many leading organizations within the heavy industry category create ESG value over a period of years. They do so by implementing a series of incremental actions that reduce impacts on natural resources, create jobs such that employees are treated fairly across the globe, and target sponsorships and grants towards activities that lead to positive social, educational, and environmental outcomes. 
 
Alternatively, organizations such as retailers or consumer product manufacturers create EGS value by implementing strategies focused on green buildings, eco-friendly product selection, public reporting, and the nature of charitable giving programs. Similarly organizations manufacturing products requiring design approval or certification, create value through establishing a record of compliance, safety and quality of goods and services that underlie product positioning.
 
Year over year improvements by leading heavy industry, consumer product manufacturers, and retailers, for example, sustain the license to operate and contribute to growth and expansion.
 
In brief, the two dimensions for quantifying improvements and value are linked. To achieve sustained positive impact organizations need to continually monitor activities and engage in program changes over a period of time. Managing ESG issues is a key determinant of success and value creation.