Banking on Biodiversity: The Next Imperative in ESG Strategy

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While many large corporations have made commendable progress in measuring and mitigating their greenhouse gas emissions, a critical environmental issue remains largely unaddressed: the rapid degradation of nature. From excessive freshwater use to deforestation and biodiversity loss, the ongoing depletion of natural capital poses a profound threat not only to ecological stability but also to global economic resilience.

Scientific analyses, including the Planetary Health Check by the Potsdam Institute for Climate Impact Research, present compelling evidence of this crisis. Of the nine planetary boundaries essential for sustaining life, six—including those governing freshwater availability, land use, pollution, and biosphere integrity—have already been exceeded. This places the global economy squarely in the "danger zone," beyond the safe operating space for humanity.

In economic terms, the stakes are significant. Over half of the world’s GDP is highly dependent on nature—through access to clean water, fertile soil, minerals, metals, and stable ecosystems. The World Economic Forum estimates that continued degradation of natural capital could result in a $2.7 trillion loss in global economic growth by 2030.

 

Defining the Role of Banks in Nature Target Setting

Financial institutions, particularly banks, can play a pivotal role in reversing nature loss by influencing corporate behavior through investment strategies and lending policies. Yet many still face challenges in establishing the kind of science-based, measurable pathways that have become standard in climate-related initiatives.

The starting point for any institution is to identify "nature hot spots"—areas where their operations or investments have the most significant impact on ecosystems, especially in terms of biodiversity.

Generally (may vary across sectors), there are three primary drivers of biodiversity loss:

• Land use change
• Freshwater consumption
• Pollution

While the mechanisms of nature degradation are relatively well understood, there remains a lack of consistent data and transparency around corporate contributions to these issues—and, crucially, the specific actions needed to reverse them. For instance, while deforestation is a well-recognized issue tied to agriculture and mining, clear, sector-specific and actionable targets for halting and reversing it are still rare.

 

Leveraging Global Frameworks for Nature-Positive Action

Banks are not starting from zero. A number of international frameworks provide valuable guidance for setting nature-related targets. The Planetary Health Check helps assess how far we are from a sustainable trajectory, allowing companies and financial institutions to reverse-engineer their goals to help return natural systems to safe operating zones.

Other critical frameworks include:

• The Global Biodiversity Framework (GBF)
• The Science Based Targets Network (SBTN) land and freshwater guidance
• The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES)
• The Taskforce on Nature-related Financial Disclosures (TNFD) sector-specific recommendations

One tangible example comes from the Planetary Health Check, which suggests reducing freshwater withdrawal in water-stressed regions by 1.5% per year. This aligns with guidance from the SBTN and illustrates how global recommendations can translate into measurable corporate targets.

In Europe, new regulatory instruments such as the European Sustainability Reporting Standards (ESRS)—part of the broader Corporate Sustainability Reporting Directive (CSRD)—are emerging as practical tools for data collection and reporting, offering a useful model for banks and regulators elsewhere.

However, many of these frameworks are broad by design, and global standards must be translated into national policies to be operationally meaningful for banks and businesses. So far, 46 countries have adapted the GBF into national-level standards, but major nature-impacting nations such as the United States, Indonesia, Malaysia, Russia, and several in Africa have yet to follow suit.

 

Focusing on High-Risk Sectors: Taking Mining and Food Systems As Examples

To illustrate how banks can set effective nature targets, let’s examines two high-impact sectors: mining and the food value chain, which includes agriculture, food processing, and beverage industries.

Within these sectors, banks should prioritize three critical areas:

1. Freshwater consumption
2. Land use change
3. Pollution

Setting meaningful targets begins with identifying robust metrics to assess progress and operational readiness. Regulatory pressure is intensifying, prompting some financial institutions to adopt short-term goals focused on reducing negative practices like deforestation and promoting positive interventions such as biodiversity monitoring and land rehabilitation. However, long-term goals focused on broader ecological restoration remain limited.

We categorize nature targets into three key types:

1. Practice-Based Targets
   These encourage or discourage specific activities, such as promoting organic farming or restricting deforestation. While many banks already incorporate such targets into financing policies and client engagement strategies, these often lack clear measurement of outcomes and overlook broader ecological impacts.
2. Impact-Based Targets
   These measure and reduce specific environmental harms, such as water withdrawals or nutrient pollution, with quantifiable outcomes. For example, setting annual water reduction goals in stressed areas or aligning fertilizer use with global industry standards or guidelines. Banks should prioritize these targets to create measurable environmental benefits.
3. State-of-Nature Targets
   These aim to restore the health of ecosystems, focusing on outcomes like biodiversity restoration or watershed health. Though more complex and harder to quantify, they represent the most ambitious and meaningful form of environmental commitment.

 

A Call for Sector-Focused, Science-Based Action

Just as banks began their climate risk management journey—largely in response to regulatory pressure via BNM Climate Risk Management and Scenario Analysis —their approach to nature must now evolve beyond broad commitments toward impact-based targets that are science-aligned, sector-specific, and measurable. This shift is essential for embedding nature into core financial decision-making processes.

Incorporating nature targets into banking practices is not merely an act of environmental stewardship—it’s a critical business strategy. Aligning financial activities with planetary boundaries helps ensure long-term economic viability and strengthens resilience against systemic environmental risks.

Ultimately, nature target setting represents a global call to integrate ecological considerations into financial and economic systems. Achieving this requires robust metrics, enforceable timelines, and coordinated action across industries and geographies.

 

All views and opinions expressed on this site are by the author and do not represent any particular entity or organisation 

 

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Where Values Meet Value: Exploring the Synergy Between ESG and Islamic Banking

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Introduction: Beyond Profits — Rethinking What Really Matters in Finance

Let’s face it — the world of business and finance isn’t what it used to be. For decades, the default yardstick for success was profitability. But today, a growing number of investors, regulators, and even consumers are asking bigger questions: What kind of impact is this company making? How does it treat people? Is it helping or hurting the planet?

This is where ESG — short for Environmental, Social, and Governance — enters the conversation. It’s more than a buzzword or reporting requirement. ESG is quickly becoming a central lens through which financial decisions are made. Banks, asset managers, and insurers are embedding ESG thinking into the very DNA of their strategies — not just because it’s trendy, but because it’s good risk management and good business.

Interestingly, many of the principles at the heart of ESG aren’t exactly new. In fact, Islamic finance has been championing ethical, responsible, and inclusive financial practices for centuries. Its values-based framework — grounded in fairness, transparency, and community wellbeing — aligns surprisingly well with the modern ESG agenda.

So, how do these two frameworks complement each other? And what happens when you bring them together in practice? Let’s dig in.

 

ESG and Islamic Banking: Different Origins, Shared Principles

While ESG might have gotten its official start in a 2004 UN Global Compact report, its essence has been influencing investment behavior for decades. The basic idea is simple: businesses shouldn’t just be financially successful — they should also do right by people and the planet.

• Environmental (E): How a company impacts natural ecosystems — think emissions, resource use, pollution, climate resilience.
• Social (S): How a company treats its employees, customers, and communities.
• Governance (G): How it’s managed — including leadership, accountability, transparency, and ethical practices.

Now, compare this with the core goals of Islamic finance. It operates under the principles of Maqasid al-Shari’ah, which are essentially the higher objectives of Islamic law. These include the protection of life, intellect, faith, family, and wealth — all geared toward a just and harmonious society. Islamic finance prohibits speculation, interest (riba), and investments in industries considered harmful (like gambling or alcohol). Instead, it promotes real economic activity and shared prosperity.

In short, both ESG and Islamic banking frameworks are rooted in accountability, stewardship, and long-term thinking. They're both about balancing profit with purpose.

 

Malaysia Leading the Way: Regulation Meets Innovation

Malaysia is a great example of how this ESG-Islamic finance crossover is playing out in real time. The country isn’t just talking the talk — it’s backing it with solid regulatory moves and financial innovation:

• Bursa Malaysia launched a Sustainability Framework as far back as 2015, nudging listed companies to improve ESG disclosures.
• The Securities Commission rolled out an SRI (Sustainable and Responsible Investment) Roadmap to guide the market.
• Bank Negara Malaysia now expects that by 2026, at least 50% of bank financing should be aligned with climate-friendly or transitional initiatives.

This kind of policy push has created a fertile ground for Islamic financial institutions to lead the way in ESG-aligned products — from sustainable sukuk to green Islamic funds.

 

Sukuk & ESG: Financing with a Conscience

Here’s where theory meets the real world. One of the most exciting meeting points between ESG and Islamic finance is the sukuk market. Sukuk, sometimes called Islamic bonds (though they’re a bit more complex than that), are Shari’ah-compliant financial instruments based on asset ownership and profit-sharing.

Because sukuk are grounded in real assets and ethical use of proceeds, they naturally lend themselves to sustainability-linked financing. In fact, Malaysia issued the world’s first green SRI sukuk back in 2017 — aimed at financing solar photovoltaic plants. Since then, we’ve seen a wave of ESG-themed sukuk from both corporate and sovereign issuers in Malaysia, Indonesia, and beyond.

These instruments are giving investors something powerful: the opportunity to generate returns while supporting clean energy, infrastructure, and community development — all within the ethical guardrails of Shari’ah.

 

Impact Investing: ESG and Islamic Finance Playing on the Same Team

Another space where ESG and Islamic banking make a great team? Impact investing — where financial returns go hand-in-hand with measurable social or environmental outcomes.

The Global Impact Investing Network (GIIN) defines impact investing with four characteristics: intentional impact, evidence-based design, performance management, and transparency. Sound familiar? That’s because Islamic finance is already doing a version of this, guided by principles of justice, tangible asset-backing, and social good.

Islamic finance avoids harmful industries, focuses on long-term partnerships, and insists on transparency — all of which align beautifully with ESG’s focus on responsible investing. Investors are increasingly applying ESG filters to understand the real-world outcomes of their investments — carbon emissions avoided, jobs created, communities served — and Islamic finance can add another layer of ethical rigor to that process.

 

Making It Work: Reporting, Trust, and Innovation

To make this synergy truly impactful, we need more than good intentions. Transparency, standardisation, and trust are key. That means:

• Clear disclosures on Shari’ah-compliant assets and ESG criteria.
• Robust ESG reporting standards, like those from the ISSB or the SC’s SRI Taxonomy.
• Third-party audits and consistent impact measurement to give investors confidence.

And of course, innovation plays a big role too. Fintech, blockchain, and digital platforms can help Islamic finance leapfrog into the ESG era — offering better traceability, smarter contracts, and more inclusive access to capital.

 

Conclusion: A Shared Future for Ethical Finance

At a time when the world is craving more responsible and inclusive financial models, the convergence of ESG and Islamic finance feels both natural and necessary.

Both frameworks remind us that finance isn’t just about numbers — it’s about values, communities, and the future of our planet. They push back against short-termism and encourage us to think long-term, act ethically, and invest in things that matter.

The rise of Shari’ah-compliant ESG products — from green sukuk to impact funds — isn’t just a passing trend. It’s part of a larger shift toward a more grounded, principled form of finance. And as more investors, regulators, and institutions embrace this intersection, we have a real shot at building a financial system that is not only profitable — but also just, sustainable, and truly meaningful.

All views and opinions expressed on this site are by the author and do not represent any particular entity or organisation 

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Measuring Social Impact: Key Approaches, Overcoming Challenges, and Best Practices

 

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The business and development landscape is undergoing a rapid transformation. Increasingly, companies are recognizing the importance of addressing pressing societal challenges—such as social justice, environmental sustainability, and community welfare—alongside their traditional business objectives. This paradigm shift has given rise to social enterprises and corporate initiatives specifically designed to leverage market-based solutions for tackling global social issues and generating lasting, positive social impact.

Organizations measure social impact to showcase their achievements while enhancing transparency, accountability, and credibility across their programs, projects, and initiatives. This process not only helps to demonstrate the effectiveness of their efforts but also fosters trust and legitimacy among stakeholders and the broader community.

While financial accounting benefits from established national and international standards for producing financial statements, the measurement and reporting of social impact—which spans ecological, social, and economic dimensions—lacks similar maturity and global consensus. This gap is largely due to the varying needs of diverse stakeholder groups and the inherent complexity of social impact programs, making it challenging to develop universally accepted frameworks.

 

Understanding Social Impact Measurement

Social impact refers to the broad and lasting effects—both social and cultural—that public or private actions have on human populations. These impacts shape how individuals live, work, interact, and adapt within the fabric of society. Whether driven by policy decisions, corporate initiatives, or community-based efforts, social impact encompasses the transformative changes that influence daily life and societal structures.

Social impact measurement is the structured and systematic process of evaluating how an organization’s activities affect society and the environment. Unlike traditional financial or business metrics, this process captures the tangible and intangible outcomes generated by development programs, social enterprises, and philanthropic initiatives.

When done effectively, social impact measurement serves as a powerful tool for informed decision-making and strategic resource allocation. It also fosters greater accountability, promotes transparency, and strengthens engagement with stakeholders by clearly demonstrating the value and relevance of an organization’s efforts in creating meaningful change.

 

Understanding and Applying Social Impact Measurement

Organizations adopt a variety of approaches to manage and measure social impact, each tailored to align with specific goals and priorities. These approaches often serve different purposes—ranging from crafting compelling narratives that communicate the impact of programs and initiatives, to building strong cases that justify the return on investment (ROI) for social and financial contributions. Whether focused on storytelling or case-building, effective measurement helps demonstrate value, drive strategic decisions, and strengthen stakeholder confidence.

 

  Key Approaches Commonly Used

Outcome Mapping is an approach that centers on identifying the desired outcomes of an intervention and understanding the roles of key stakeholders in achieving them. Rather than solely focusing on end results, it emphasizes the pathways of change—tracking shifts in behavior, attitudes, and relationships over time.

This method relies on both qualitative and quantitative data collection techniques, such as interviews, surveys, and focus group discussions (FGDs), to monitor progress and assess impact. Outcome Mapping is particularly useful for complex or adaptive programs where change is not always linear.

Inputs: What resources (e.g., time, funding, personnel) have been allocated to achieve the desired impact goals?

Activities: What specific actions or initiatives have been implemented to drive progress toward these goals?

Outputs: What are the immediate, tangible results or products produced from the activities?

Outcomes: What are the short-term, observable effects or changes resulting from the interventions?

 

Theory of Change (ToC) is a strategic framework that visually maps out how specific activities are expected to lead to desired outcomes and long-term impact. It helps stakeholders clearly understand the underlying assumptions, pathways of change, and causal linkages that drive progress. By making these connections explicit, ToC serves as a valuable tool for planning, implementation, and evaluation.

ToC also supports the identification of relevant indicators and measurement strategies that align with a project’s objectives, ensuring that progress can be effectively tracked and assessed over time.

Key questions addressed by a Theory of Change include:

• What impact does the program or project aim to achieve?
• What mechanisms or interventions will lead to that impact?
• How will we know when the desired impact has been achieved?

 

Social Return on Investment (SROI) is a framework for measuring and communicating the broader social, environmental, and economic value created by an intervention relative to the resources invested. It goes beyond traditional financial metrics by assigning monetary values—where possible—to inputs, outputs, outcomes, and long-term impacts. Through this process, SROI enables organizations to calculate a ratio that reflects the social value generated for every unit of investment (e.g., $1 invested yields $3 in social value). This comprehensive approach offers deeper insight into the true value of programs, helping to justify funding, improve decision-making, and strengthen stakeholder engagement by demonstrating the meaningful returns delivered beyond financial profit.

Randomized Controlled Trials (RCTs) are rigorous experimental designs used to assess the effectiveness of an intervention by randomly assigning participants into two groups: a treatment group that receives the intervention, and a control group that does not. This process of randomization minimizes selection bias and ensures that both groups are statistically comparable at the outset.

By measuring and comparing outcomes across these groups, RCTs enable precise causal inference, allowing researchers to attribute observed changes directly to the intervention. Often regarded as the gold standard for impact evaluation, RCTs provide robust, high-quality evidence that can inform policy, guide program design, and improve resource allocation. Their ability to isolate the true effects of an intervention from external factors makes them especially valuable in complex social and development contexts.

 

Common Challenges in Social Impact Measurement

Measuring social impact is a critical but complex process. While numerous frameworks and methodologies are available, each comes with its own limitations and must be adapted to the specific context of the organization and the social issue being addressed. Organizations often encounter a range of challenges in their efforts to assess social impact effectively. These challenges include:

1. Complexity of Social Issues
Social issues are inherently multifaceted and interdependent, making it difficult to isolate and measure the effects of a single intervention. The intersection of social, economic, cultural, and environmental factors often blurs the direct impact of programs, complicating efforts to draw clear causal connections.

2. Lack of Standardized Metrics
The absence of universally accepted metrics and indicators for social impact hampers consistency in measurement. Without standardization, it becomes difficult to compare results across organizations, sectors, or regions, and can lead to inconsistent reporting and limited benchmarking opportunities.

3. Long-Term Impact Considerations
Many social outcomes evolve over extended periods and may take years—or even decades—to fully materialize. This presents a challenge for organizations needing to demonstrate short-term progress, especially within funding or strategic planning cycles. Longitudinal evaluations, while valuable, can be resource-intensive and time-consuming.

4. Limited Comparability
Differences in organizational goals, methodologies, and target populations make it difficult to compare impact data across initiatives. These variations limit the ability to extract broader insights or identify best practices, and may hinder collaborative learning across the sector.

5. Attribution vs. Contribution
A persistent challenge lies in distinguishing whether observed outcomes can be directly attributed to a specific intervention, or whether they are influenced by external factors. Demonstrating attribution requires rigorous evaluation design, including the use of control groups or counterfactuals—approaches that may not always be feasible or ethical. Often, organizations must settle for demonstrating contribution rather than causality.

6. Data Quality and Availability
Reliable, high-quality data is the foundation of effective impact measurement. However, organizations may face challenges related to data availability, accessibility, and accuracy. Inadequate data collection tools, inconsistent methodologies, and biases in data reporting can undermine the credibility and utility of impact assessments.

7. Time and Resource Constraints
Comprehensive social impact evaluations demand significant investment in time, expertise, and financial resources. For many organizations—particularly smaller ones—limited budgets and capacity may necessitate compromises, such as narrowing the scope of evaluation or reducing the frequency of data collection.

8. Contextual Sensitivity
Social impact measurement must be attuned to the local context in which interventions are implemented. Failing to account for cultural, socio-economic, and political dynamics can result in misinterpretation of findings and ineffective decision-making. Tailoring impact measurement approaches to specific communities is essential to ensure relevance, accuracy, and cultural responsiveness.

 

To advance meaningful social impact measurement, organizations must recognize these challenges and address them through thoughtful strategy, capacity building, and collaboration. By doing so, they can improve the quality and credibility of their evaluations, make more informed decisions, and ultimately maximize their contributions to positive societal change.

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Best Practices for Social Impact Measurement

To effectively measure and amplify social impact, organizations must adopt a comprehensive, strategic, and adaptive approach. This extends beyond tracking key performance indicators—it requires meaningful stakeholder engagement, smart use of technology, rigorous data practices, and a firm commitment to ethical standards. Below are best practices that serve as a roadmap for organizations aiming to achieve measurable, sustainable, and impactful change.

 

1. Define Clear Objectives and Indicators

Start with a strong foundation by establishing well-defined, measurable objectives that align with your organization’s mission and values. Develop a suite of indicators that capture both quantitative and qualitative dimensions of impact—ranging from immediate outputs to intermediate outcomes and long-term effects. Regularly review and refine these indicators to ensure they remain aligned with evolving strategic goals and are responsive to changes in the operating context. Effective indicators should not only measure change but also inform decision-making.

 

2. Engage Stakeholders Throughout the Process

Stakeholder involvement is essential for ensuring that measurement efforts are inclusive, relevant, and credible. Engage key stakeholders—such as beneficiaries, community members, donors, partners, and staff—at every stage of the process. This includes co-creating measurement frameworks, participating in data collection, and contributing to the interpretation of results. Use participatory methods, such as workshops and feedback sessions, to ensure diverse perspectives are represented. This collaboration fosters trust, increases the legitimacy of findings, and ensures the impact assessment reflects what truly matters to those affected.

 

3. Develop a Deep Understanding of Your Data

A robust understanding of data sources, quality, and limitations is crucial. Develop a comprehensive data strategy that outlines how data will be collected, managed, analyzed, and interpreted. Clearly define roles, responsibilities, and protocols to ensure consistency and accuracy. Build internal capacity by training staff in data literacy and analysis. Employ data visualization tools to make complex findings accessible and actionable for diverse stakeholders. High-quality data is the backbone of credible and effective impact measurement.

 

4. Use a Mixed-Methods Approach

A blend of quantitative and qualitative methods provides a well-rounded view of impact. Quantitative data offers measurable insights into reach, scale, and effectiveness, while qualitative methods—such as interviews, focus groups, and case studies—uncover rich, contextualized narratives about how and why change occurs. Triangulate data from multiple sources to enhance validity and reduce bias. This integrated approach offers a deeper, more nuanced understanding of both outcomes and lived experiences.

 

5. Foster a Culture of Learning and Adaptation

Social impact measurement should be more than an accountability exercise—it should drive learning and improvement. Create feedback loops that allow your organization to reflect on findings, identify what’s working (and what isn’t), and adapt strategies accordingly. Encourage an internal culture that values learning from both success and failure. By continuously applying insights from data, organizations become more agile, resilient, and responsive to the communities they serve.

 

6. Leverage Technology for Greater Efficiency

Embrace digital tools to streamline data collection, storage, analysis, and reporting. Mobile survey platforms, cloud-based databases, and real-time dashboards can dramatically improve accuracy, timeliness, and scalability. Advanced analytics and data visualization tools can turn raw data into actionable insights. By integrating technology thoughtfully, organizations can enhance both the efficiency and effectiveness of their impact measurement systems.

 

7. Prioritize Ethical Integrity

Ethical considerations must underpin all aspects of impact measurement. Ensure that data collection processes prioritize informed consent, confidentiality, and the dignity of participants. Adopt robust data protection and privacy protocols to safeguard sensitive information. Be transparent with communities about how data will be used and respect their right to participate—or not—on their own terms. Ethical engagement builds trust and minimizes the risk of harm.

 

8. Commit to Transparent Reporting

Transparency builds credibility. Share findings openly with stakeholders in a format that is accessible and easy to understand. Use clear language, visuals, and storytelling to communicate both successes and challenges. Disclose methodologies, limitations, and areas for improvement. Transparent reporting not only reinforces accountability but also contributes to sector-wide learning and innovation.

 

9. Collaborate to Strengthen the Field

No organization operates in isolation. Partnering with academic institutions, research organizations, and peer networks can unlock new expertise, resources, and approaches. Collaborations can also facilitate the development of shared standards, metrics, and benchmarks, enhancing the overall consistency and quality of impact measurement across sectors. Working together accelerates collective learning and drives systemic change.

 

By following these best practices, organizations can build more effective, inclusive, and credible systems for social impact measurement—ensuring their efforts lead to real, lasting, and transformative change.

  

All views and opinions expressed on this site are by the author and do not represent any particular entity or organisation 

 

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Unlocking the Power of ‘S’ in ESG: How Companies Can Drive Real Social Impact

 

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Introduction

As environmental, social, and governance (ESG) investing continues to soar—projected to rise 84% to $34 trillion by 2026, according to PwC—so too do the questions surrounding the true impact and value of ESG strategies, particularly from consumers, private companies and even political figures.

Yet, ESG-focused investors and companies remain steadfast. " Belying questions of whether financial and ESG performance might conflict, nine of 10 asset managers surveyed believe that integrating ESG into their investment strategy will improve overall returns " PwC reports.

The Business Roundtable, representing 250 of the top U.S. CEOs, echoes this sentiment. “Companies should serve not only their shareholders, but also deliver value to their customers, invest in employees, deal fairly with suppliers, and support the communities in which they operate,” its Purpose of a Corporation states.

However, the "S" in ESG, representing a company's social responsibility, remains unfairly scrutinised, as its measurement and value are often subjective. Unlike the "E," which is quantifiable through carbon emissions, energy consumption, and waste output, amongst others —and guided by the International Financial Stability Board's standardised climate-related reporting frameworks. The "G" is generally regulated by strict reporting standards enforced by the regulators and other authorities.

But when it comes to social impact, the lack of clear reporting standards for the "S" gives companies greater flexibility in how they report their contributions to society. While this freedom allows for creative approaches, it also leaves companies vulnerable to criticism for making unsubstantiated claims or focusing more on brand image than real change. As a result, they risk losing the trust of both employees and consumers when their actions fail to live up to their values.

Companies can significantly strengthen the "S" in their ESG strategies through five transformative actions:

1.       Clearly define your purpose and impact through your business

Every company has the power to drive a more equitable society by leveraging the products and services they already offer. Telco companies are closing the broadband access divide. Banks and property developers are addressing the homeownership gap. Healthcare is delivering essential medical services to vulnerable communities in need.

Tech companies that support food banks are doing valuable work. However, an even more powerful approach is to address the root cause by helping individuals secure tech jobs through training. By empowering people with the skills for higher-paying, more stable careers, we can reduce reliance on food banks and create lasting economic mobility.

  

2.       Understand and focus on the metrics

Peter Drucker's timeless principle, "What gets measured, gets managed," has stood for over 70 years. In today's data-driven world, the ability to collect and analyze information to guide business operations and assess outcomes is not only more accessible but also expected.

However, measuring social good remains a challenging endeavor, making it difficult to manage. Nonetheless, it is achievable when companies take a structured approach—clearly defining objectives, setting goals, tracking progress, and reporting on their social impact commitments.

For example, it’s not just about the amount of corporate funding allocated; rather, it’s about the measurable societal impact—specifically, the people and communities that are positively affected. This becomes more manageable when nonprofit organizations embrace return-on-investment (ROI) principles and offer transparency in their results, enabling donor companies to meet their own ROI expectations.

 

3.       Begin with your internal foundation – social impact starts with your people

Establish clear and measurable DEI objectives, along with employee engagement metrics, particularly for historically marginalized and underrepresented groups. It is crucial to remain steadfast in pursuing DEI initiatives, even amidst economic fluctuations.

Additionally, integrate Environmental, Social, and Governance (ESG) efforts with corporate social responsibility (CSR) functions, corporate giving, and employee volunteer programs. Too often, these areas operate in silos, work at cross purposes, send conflicting messages, and waste valuable resources. Leverage employee passion for your mission by offering volunteer and giving opportunities that reinforce your ESG objectives, while setting ambitious, measurable goals.

While the social value of DEI is widely discussed, the business case is often overlooked. However, some organizations such as Wall Street increasingly seeks partnerships with women- and minority-owned banks, not solely for DEI purposes, but to enhance their ability to raise capital. This shift highlights the growing recognition of the business benefits DEI can provide.

  

4. Reach out and connect

Identify, engage, and prioritize partnerships with corporate partners, vendors, and supply chain providers to collaboratively achieve social good objectives, creating a powerful force-multiplier effect. Leverage your purchasing power to encourage others to join in these efforts.

When companies focus on social-good initiatives aimed at closing gender or racial disparities, they simultaneously open new market opportunities. While the social benefits are often emphasized, the business advantages are frequently overlooked.

For example, a leading financial institution actively seeks business with minority securities dealers, not merely to advance DEI objectives, but to tap into, serve, and capitalize on previously underserved markets.

 

4.       Extend partnerships

Nonprofits are uniquely positioned to help you achieve measurable social goals. As frontline agents of social good, they are deeply attuned to the immediate and evolving needs of communities.

While donating to large national and global nonprofits is a reliable approach, supporting local community-based organizations—who are closer to the ground and better informed about what works—can significantly amplify the impact of your social investment.

Additionally, consider contributing to the development and strengthening of a community nonprofit’s operational infrastructure. By providing "unrestricted" funds, you empower these organizations to allocate resources where they are most needed, allowing expert leaders to decide how best to use your generosity.

 

Conclusion

By refining the "S" in ESG with a strategic business mindset, you can help demonstrate that social good is not only a moral imperative but also a sound business practice, one that benefits both investors and the broader public.

 

All views and opinions expressed on this site are by the author and do not represent any particular entity or organisation 

 

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Challenges in ESG Reporting

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Sustainability Reporting – what challenges to expect

 

Sustainability Reporting is now common and we are seeing companies have progressed in their reporting maturity over a short period of time.

Generally, the purpose of Sustainability Reporting is to demonstrate performance as well as for companies to build reputation as a ‘Sustainable Company”.

Before companies get excited to be self-labeled as ‘Sustainable’, there is a key factor that companies need to govern and manage to ensure a Sustainability Report is able to meet its purpose and objective.

                                                

DATA

Data demonstrates performance. This is how companies can build reputation through transforming data and presenting it through success and aspiring stories. To derive this, it starts by establishing a robust data collection and management governance and procedure.  This can be a complicated and tedious process.

These includes the following:

·         Identify WHAT needs to be collected

·         Identify WHO to be involved in the process

·         Identify WHERE to obtain the information

·         Identify HOW to effectively collect and manage data from end to end

 

Ideally, the aim is to establish a robust and credible data management standard operating procedures (SOPs).

 

Identify WHAT needs to be collected

The data required to be reported would depend on the reporting framework or standards chosen as well as the outcome of the materiality assessment, but this may not be ideal in application as different metrics have different reporting boundaries, which represent the description of where an impact occurs arising from an organisation’s operational activities or relationships with other entities.  It is crucial for reporters to take the effort to understand the reporting boundary of any given issue. For instance, office building energy use, specifically energy consumption for heating and electricity can be either Scope 1 or Scope 2 GHG emissions depending on whether the energy used is provided that own company or purchased from an external provider or source. In the case of heating, there may be on-site combustion at own premises or offices or other facilities, in which case the emissions from fuel use for heating would belong under Scope 1 emissions. If, however heating is provided by an external provider then the emissions from the purchased heat would be reported under Scope 2.

               

Reporters should also consider the possibility that not all the data collected is necessary to be disclosed as it is. To take the same example as above on the GHG emission, regardless of whether the said emission is Scope 1 or Scope 2, the data is just considered as ‘activity data’ which would need to be further multiplied with the relevant emission factor for the purpose of reporting.

 

 Identify WHO to be involved in the process

Much of the data required for ESG reporting is likely already available within the organisation. However, since this data may not be part of a formal collection process, it is needed to identify the data managers responsible for it. Begin by interviewing those data managers who are likely to have some of the information needed for ESG reporting. When discussing data requirements, provide a clear overview of the expectations and alignment with regulatory requirements and reporting standards, as administrative staff may know other relevant data owners and can help identify additional data managers. This step is particularly crucial if organisation has multiple facilities, buildings and assets. The more complex the organisation is, the more data managers needed to be involved in the reporting process.

 

Identify WHERE to obtain the information

Once have identified all the data managers, it’s essential to map the business processes from which they gather the data. For certain data points, such as Social data from HR, the source will be clear. However, it’s important to document the location of all data sources to ensure consistency and continuity.

It's crucial to document all data sources to ensure that personnel changes don’t disrupt the continuity of ESG reporting. Disruptions caused by staff turnover in ESG reporting are a common issue for companies, often because data source documentation wasn't performed during the initial report creation. When the data manager familiar with the relevant data sources for a particular ESG issue leaves, reporting for that issue can come to a standstill.

 

Identify HOW to effectively collect and manage data from end to end

Documentation requires efforts and time, but it is worth and critical that you do this for each indicator to be reported:

• Is the data or information sourced from internal or external?
• Is the data sourced from single data point or to be consolidated from multiple business sources?

• Who is the current data manager or do they partially own data with other data managers?

 

By keeping an up-to-date document detailing how each indicator is reported, you can ensure the continuity of your reporting process. While this may seem like an obvious step, it's often overlooked by first-time reporters, as its importance becomes clear only when it’s time to prepare the next report a year later. When preparing your first report, always keep in mind that this will be an ongoing, annual process moving forward.

  

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