ESG Management use case
Summarize
Summary of ESG Management use case
The ESG Management use case guides ServiceNow customers through establishing and managing an Environmental, Social, and Governance (ESG) program. This involves setting up the program, defining measurable goals and metrics, collecting and reporting data, adhering to regulatory frameworks, and generating comprehensive ESG disclosures. The process supports organizations in tracking sustainability efforts and demonstrating accountability to stakeholders.
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Setting up the ESG Management Program
ESG administrators and program managers initiate the ESG program by:
- Assessing materiality: Identify and document the most significant ESG topics that impact stakeholders and the organization, based on external inputs.
- Defining goals and targets: Establish broad, long-term ESG goals aligned with company values, alongside specific, measurable, time-bound targets to track progress. Targets cover environmental, social, and governance aspects and include specifying data sources for measurement.
- Scoping entities: Associate each goal with organizational entities responsible for progress tracking.
Defining Metrics and Data Collection
ESG metrics administrators set up comprehensive data collection processes using three types of metric definitions: manual, calculated, and automated. Key ESG metrics should align with industry best practices, such as carbon emissions, energy consumption, diversity, workplace safety, and supply chain sustainability. Ensuring data accuracy involves establishing proper tracking systems and collaborating with relevant data providers.
Measurement Reporting and Reporting Framework
Program managers and metrics administrators monitor collected metrics against predefined thresholds and objectives, documenting any deviations. They develop an ESG reporting framework based on recognized standards like GRI, SASB, and TCFD, which defines reporting boundaries, disclosure protocols, and data requirements to ensure transparent and consistent ESG disclosures.
Generating Disclosures
ESG disclosure managers use the collected data to produce annual ESG reports that provide a detailed overview of the company’s sustainability performance. These reports include quantitative and qualitative information about achievements, challenges, goals, and future initiatives across environmental impact, social responsibility, and governance domains.
The ESG use case consists of multiple processes such as setting up your ESG program, defining metrics, collecting data for metrics, adhering to regulatory frameworks, and generating disclosures.
Setting up the ESG Management program
- Assessing materiality: Assessing materiality enables you to discern the most significant material topics and their respective areas of impact on your stakeholders and organization. Firstly, you identify the material topics that hold the greatest importance for your stakeholders and possess the most substantial influence. The identification of topics happens externally and then they are documented in the ESG Management application.
- Defining goals and targets: As an ESG program manager, you can choose to create goals and targets for your material topics.
Goals and targets play a crucial role in driving and measuring the success of an ESG initiative. Here's a brief explanation:
Goals: Goals in an ESG initiative are broad, long-term aspirations that define the overall purpose and direction of sustainability efforts. They are often aligned with the company's mission, values, and stakeholder expectations. Examples of ESG goals include reducing greenhouse gas emissions, promoting diversity and inclusion, and improving corporate governance.
Targets: Targets are specific, measurable, and time-bound objectives set to achieve the broader ESG goals. They provide clarity and focus, enabling organizations to track progress and demonstrate accountability. Targets can be established for different aspects of ESG, such as environmental impact, social issues, and governance practices. When you set targets, you must also specify the sources from where the target will obtain data.
- Environmental targets: These relate to reducing the company's environmental footprint and promoting sustainable practices. They can include targets for carbon emissions reduction, water and energy conservation, waste management, and adoption of renewable energy sources.
- Social targets: These focus on addressing social issues and fostering positive impacts on communities and employees. Examples of social targets include increasing workforce diversity, ensuring fair labor practices, promoting employee well-being and safety, and supporting community development initiatives.
- Governance targets: These targets emphasize the implementation of robust governance frameworks and ethical business practices. They may involve enhancing transparency and accountability, strengthening board independence, promoting responsible executive compensation, and ensuring compliance with legal and regulatory requirements.
- Scoping entities: Each goal is associated to an entity that must be tracked for the progress being made.
Defining metrics
As an ESG metrics administrator, establish a comprehensive data collection process to gather relevant ESG data across all operations. The data can be collected using metric definitions. The three types of metric definitions are manual, calculated, and automated. Identify the key ESG metrics aligned with industry best practices, such as carbon emissions, energy consumption, waste management, employee diversity, workplace safety, supply chain sustainability, and corporate governance. Ensure data accuracy by implementing appropriate tracking systems and engaging relevant stakeholders such as data providers for manual metrics.
Measurement reporting
Once the material topics are identified, the ESG metrics administrator and an ESG program manager collect the metrics that are of utmost importance to the organization. You can report on the performance of these metrics against predetermined thresholds and objectives, as well as document any issues that arise when the metrics fail to meet the thresholds.
Reporting framework
As an ESG program manager, develop an ESG reporting framework based on recognized standards like the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), and Task Force on Climate-related Financial Disclosures (TCFD). The framework defines reporting boundaries, disclosure protocols, and data.
Generating disclosures
As an ESG disclosure manager, using the collected data, generate an annual ESG report. The report provides a comprehensive overview of the company's sustainability performance, including quantitative and qualitative data. Highlight the achievements, challenges, goals, and future initiatives related to environmental impact, social responsibility, and corporate governance.