ISO 14001 and the E (Environment) in ESG
Sustainability is a word frequently used and whose meaning we, just as often, do not understand the extent. The term encapsulates the protection of our natural environment and human and ecological health while powering innovation that does not compromise our quality of life.
There has been an increasing awareness of sustainability as a crucial aspect of investing. Often conflated or used interchangeably is the concept of Environmental, Social and Governance (ESG) and “sustainable investing.” Sustainable investing is considered the umbrella concept, and ESG, a set of data tools for identifying and informing our solutions.
The growth in the market demands that organisations implement ESG practices. It is here that ISO 14001, an Environmental Management Systems (EMS) standard, is an important solution that is gaining strength in and being propelled by this new conversation.
What is ESG?
Environmental, Social and Governance (ESG) refers to the three fundamental factors in measuring the sustainability and societal impact of an investment within an organisation.
Environmental (E) – includes climate risks, natural resources scarcity, pollution and waste, and environmental opportunities.
Social (S) – includes labour issues and product liability, and risks.
Governance (G) – includes corporate governance and behaviour.
Integrating ESG
Organisational leaders need to assume a proactive approach to holistically integrate ESG into their organisation, particularly among rapid developments within the space. Understanding ESG issues and the potential impact of ESG factors on their investment strategy and the overall working environment is a valuable part of good governance.
The growth in Corporate Responsibility (CR) efforts has brought an abundance of questions about how much mainstream investors value the practices of ESG. While there may have been a strong focus on ESG issues for decades, investors have expressed their goal of aligning financial activities with social and environmental objectives, values, or beliefs. This is the conversation of ESG integration – a reference to the inclusion of ESG standards into investment analysis based on the idea that ESG issues propel financial returns.
ISO 14001: A Framework for the letter E (Environment)
ISO 14001 is a global framework on environmental management with requirements and is subject to certification. The standard was formerly known for its strong industrial inclination, particularly in chemical industries. More recently, as per the new demand for ESG practices, many branches of activity are looking for certification in the standard, regardless of the industry.
Interestingly, this new reality sees the integration of ISO 14001 with other standards that comprise the management framework for ESG companies, such as ISO 45001 for Occupational Safety and Health. A certification in this standard allows organisations a more robust approach to continuous improvement and accreditation on the environmental issue.
Notably, the market requires that more organisations integrate ESG practices. ISO 14001 stands as a tool that is already validated for one of the three central factors that measure an organisation’s sustainability and the societal impact of an investment in it.
