What are ESG criteria? Is your company affected?
ESG criteria = Environmental, Social, and Governance criteria.
They provide a way to assess the actions of a company or a specific sector in terms of sustainable development.
ESG criteria allow a company to be evaluated on ecological, social, and governance factors, complementing traditional financial metrics. In short, they are used to assess an economic player's CSR approach.
ESG assessment forms the basis of a company's non-financial reporting. In France, this is known as the DPEF (Declaration of Extra-Financial Performance), and it is mandatory for certain companies.
Environmental: CO2 emission reduction, energy consumption, waste management, and prevention of risks related to industrial disasters.
Social: compliance with labor laws, management policies based on social dialogue, prevention of workplace accidents, pay equity and gender parity, employment of people with disabilities, skills development, and consideration of social and environmental impacts within the supply chain.
Governance: relationships between stakeholders, investors, shareholders, suppliers, management, the board, and clients; gender balance on boards of directors; anti-corruption measures; and transparency in employee compensation.
Taking ESG criteria into account adds a metric to your overall management that helps measure and highlight your CSR efforts.
ESG assessment helps you to:
Boost your brand image with your customers; measuring your CSR approach allows you to communicate effectively by providing concrete, precise data. This helps avoid greenwashing.
Convince investors who are increasingly looking for socially responsible investments (SRI) by providing documents that prove your company's commitment. ESG criteria were factored into investment strategies for over a third of total assets under management in France in 2019.
Win tenders: Large companies are required to comply with rules regarding their social and environmental impact. Increasingly, they must choose responsible partners to meet the regulations they are subject to. You can easily justify your social, environmental, and governance commitment through your ESG assessment.
Gain a major competitive advantage and stand out from the competition: communicating about ESG criteria gives your company a significant edge. Sharing concrete data also ensures the compliance of your actions. This will allow you to prove that your company considers its social and environmental impacts and is actively working to reduce them.
The Declaration of Extra-Financial Performance allows companies to report on the actions they have taken regarding social, environmental, and governance issues.
The topics covered by the DPEF are numerous and revolve around three pillars (Social, Environmental, and Societal). ESG criteria form the foundation of the DPEF.
The DPEF is structured into 3 parts:
1 - Business model: an overview of how your company creates value.
2 - Risk analysis: identifying risks specific to your operations (risk mapping, materiality matrix).
3 - Your policies: For each identified risk, you must share your indicators, targets, and the actions you’ve taken to mitigate it.
The DPEF must be verified by an independent third party to confirm the accuracy of the company's reporting.
If your company is subject to these requirements, the DPEF must be published on your website for 5 years.
Discussions are currently underway at the European Union level to expand reporting obligations to more companies, specifically all large companies and all listed companies (excluding listed micro-enterprises). This applies to companies meeting at least 2 of the following 3 criteria:
-total balance sheet: €20 million;
-net turnover: €40 million;
-average number of employees during the financial year: 250.
Your company's sustainable performance
