ESG gap analysis, review and benchmarking

ESG gap analysis

Identify the strengths and weaknesses of your organisation’s environment, social and governance (ESG) strategies with a gap analysis.

An ESG gap analysis is the process of conducting a materiality assessment of an organisation’s ESG issues prior to conducting a performance assessment of how the organisation is managing those issues. It benefits organisations that have already implemented an ESG strategy and wish to delve deeper into understanding their ESG maturity level for continuous improvement in short, medium and long-term.

Benefits

1. Full assessment from an outside-in perspective
   • Provides a comprehensive evaluation of an organisation's ESG strategies from an external perspective, offering a holistic view.
2. Objective identification of strengths and weaknesses
   • Objectively identifies the strengths and weaknesses in an organisation's ESG management, facilitating unbiased insights for improvement.
3. Understanding customers' ESG stewardship trending
   • Helps organisations understand evolving customer expectations and trends related to ESG stewardship, enabling alignment with customer values.
4. Prioritisation and optimisation of resources
   • Facilitates effective resource allocation by helping organisations prioritise ESG aspects critical for improvement, optimising efforts and investments.
5. Understanding competitors and industry
   • Provides insights into the ESG performance of competitors and industry benchmarks, allowing organisations to position themselves strategically.
6. Obtaining greater expert insights
   • Leverages the expertise of professionals conducting the analysis, offering valuable insights and recommendations for enhancing ESG strategies.

Process

To achieve continuous improvement in ESG strategies, the following activities are typically included in an ESG gap analysis:

1. Review material topics relevant to the organisation
   • Identification and examination of material ESG topics relevant to the organisation's operations and stakeholders.
2. Review relevant data and documents based on defined criteria
   • Evaluation of available data and documents related to ESG performance, based on pre-defined criteria.
3. Interview senior leadership
   • Conduct interviews with senior leadership to gain insights into the organisation's visions, missions, strategies, and existing plans related to ESG.
4. Conduct research for competitor and industry benchmarks
   • Research to benchmark the organisation against competitors and industry standards, providing contextual insights.
5. Evaluate ESG stewardship trending
   • Assessment of ESG stewardship trends to ensure strategies align with evolving industry and market expectations.
6. Identify gaps and provide recommendations
   • Identification of gaps in ESG strategies and the provision of recommendations to address these gaps for continuous improvement.

Scope

• Dependent on material topics
  • The scope depends on the material ESG topics identified in the initial stages, ensuring a targeted and relevant analysis.
• Performance assessment threshold
  • The performance assessment varies based on the threshold defined for ESG performance, allowing for tailored evaluations.

ESG best practices

When implementing an ESG strategy, organizations can consider well-established international and local ESG best practices, including:

• UN Sustainable Development Goals (SDGs)
  • Utilising the globally recognized SDGs as a framework for setting and aligning ESG targets.
• Science-based targets initiative (SBTi):
  • Setting emission reduction targets in line with climate science to contribute to global climate change efforts.
• ISS ESG corporate rating, MSCI ESG ratings, DJSI
  • Leveraging established ESG rating systems for performance measurement against industry benchmarks.
• ISO 14001 (Environmental Management) and ISO 26000 (Social Responsibility):
  • Adhering to internationally recognized standards for environmental management and social responsibility to enhance ESG credibility.