ESG

1. Driving Sustainable
Success: Integrating
ESG into Operational
Excellence
Abbigail Meah-Ali
Quality Innovations Summit– Session 108 – September 20, 2023
1

2. Learning Objectives
In this session you will:
–Understand ESG principles, their significance, and the
evolving regulatory landscape
–Acquire practical tools and methodologies to assess, and
integrate relevant ESG factors into their operational
processes
– Gain insights into measuring and reporting ESG
performance
–Apply effective stakeholder engagement for successful
ESG integration
2

3. Speaker Introduction
Abbigail Meah-Ali (Abbi)
– Bsc Chemistry & Management
– Heriot Watt, Edinburgh University, MBA
– University of Queensland, MicroMasters in Sustainability
– ASQ Senior Member and ASQ ConnEx
– The Chartered Quality Institute (CQI) :Chartered Quality Professional - MCQI CQP;
– Professional Evaluation and Certification Board (PECB) Certified Trainer;
– ASQ Certifications: CQE , CMQ/OE , CRE, CQA, CSSGB, CQSP
– IIA Certified Risk Management Assurance (CRMA®) and Certified Internal Auditor (CIA)
– PMI, Certified Project Management Professional (PMP)®
3

4. Definition of ESG and its components
– A framework used to assess an organization's
business practices and performance on various
sustainability and ethical issues
– Three interconnected pillars that represent a
comprehensive framework
– A crucial role in shaping operational excellence and
driving sustainable business practices
Understanding ESG
4

5. Understanding ESG
5
Environmental
Climate Change
•Carbon Emissions
•2-Degree Alignment
•Fossil Fuel Reserves
•Energy Efficiency
•Renewable Energy
Resource
Management
•Water Management
•Raw Materials
•Energy Sources
Environmental Impact
•Air Quality
•Ecological impacts
•Critical Incidents/Accidents
•Waste Management
•Plastics

6. Understanding ESG
6
Social
Workforce & Human
Capital
•Inclusion and Diversity
•Supply Chain Labor
•Workplace Health and
Safety
•Gender Pay Gap
Value Chain (Suppliers
and Customers)
•Product Health and
Safety
•Data Privacy
•Data Security
•Predatory Sales / Pricing
Society and
Communities
•Community Relations
•Economic Impacts
•Human Rights
•Corruption
•Political Activities

7. Understanding ESG
7
Governance
Board Quality
•Independence
•Skills and Qualifications
•Diversity
•Refreshment
•Board Leadership
Shareholders Rights
•Board Accountability to
Shareholders
•Shareholders’ ability to act
•Voting Rights
Management Incentives
•Pay-for-Performance
Alignment
•Ownership Requirements
•Metrics and Goals
•Severance / CIC Payouts

8. ESG addresses many topics and stakeholders
Represents the company’s efforts to systematically
assess, manage, and monitor risks of material potential
impact to the strategic and financial decisions of the
company
Often used as a synonym for sustainability, CSR, public
relations, social investment, or environmental
compliance
At the center is the preservation of shareholder value
Understanding ESG
8

9. In driving operational excellence
– Risk Mitigation and Resilience
– Stakeholder Trust and Reputation
– Enhancing Innovation and Efficiency
– Talent Attraction, Employee Engagement and
Productivity and Retention
– Resource Efficiency, Cost Savings and Long-term
Financial Performance
Significance of ESG
9

10. Risk Mitigation and Resilience
–ESG factors help identify and address potential risks
and vulnerabilities in the business
–Proactive risk management enhances the
organization's ability to navigate uncertainties and
crises
–Improved resilience ensures continuity and
minimizes disruptions in operations
Significance of ESG
10

11. Enhanced Stakeholder Trust
–Demonstrating a commitment to ESG fosters trust
among customers, employees, investors, and other
stakeholders
–Transparent and ethical practices build long-lasting
relationships with stakeholders
–Enhanced trust contributes to brand reputation and
customer loyalty
Significance of ESG
11

12. Innovation and Adaptability
– Integration encourages innovation in products,
services, and processes to meet evolving customer
needs
–Organizations adapt to changing market dynamics
and emerging trends more effectively
–Innovation drives competitive advantage and
positions the company as a market leader
Significance of ESG
12

13. Employee Engagement and Productivity
–Prioritizing social factors, such as employee well-
being and diversity, fosters a motivated and engaged
workforce
–Engaged employees contribute to higher
productivity, reduced turnover, and a positive work
culture
Significance of ESG
13

14. Resource Efficiency, Cost Savings and Long-term
Financial Performance
–Environmental considerations lead to resource
efficiency and waste reduction
–Sustainable practices result in cost savings through
energy conservation and optimized resource use
–Addressing governance aspects improves decision-
making, transparency, and financial stability
–Sustainable financial performance leads to
enhanced investor confidence and access to capital
Significance of ESG
14

15. Who is Driving the Emphasis on ESG?
– Large investors, such as BlackRock and State
Street
–Directors want their companies to be identified as
leaders in this area
– Business customers increasingly link purchasing
decisions to ESG matters
–Customers want to spend money with companies
that share their values
Significance of ESG
15

16. Who is Driving the Emphasis on ESG?
– Employees are feeling increasingly
empowered to insist that their companies
pursue and achieve ESG; this, in turn, becomes an
employee retention and attraction matter
–Government regulators both in the EU and the SEC
in the United States
Significance of ESG
16

17. Eco Coffee
17
Coffee brands have focused their sustainability goals to the pods
and coffee grounds themselves, but some brands are now making
machines and brewers that are also eco-friendly. Brewers are being
made with low-power functions, recycled (and recyclable) materials,
and extended lifespans.
As more consumers are introduced to convenient and effective eco-
friendly alternatives to traditional products, they're more likely to
value sustainability when searching for products they intend to use
in the long term. Eco conscious consumers are looking for ways to
steadily adopt a lifestyle that has minimal environmental impact--and
seek out brands that make sustainable claims without asking
consumers to change their habits and routines.
Question - How could your brand better balance investors,
employees, legal requirements and customer’s desire for
sustainable and convenient products?

18. Regulatory Frameworks and standards
– Include laws and regulations related to
environmental protection, labor rights, diversity
and inclusion, corporate governance, and more
–ESG reporting and disclosure standards
ESG Rating Agencies
–Rating agencies are organizations that assess and
rate companies and entities based on their
performance in environmental, social, and
governance aspects
Regulatory developments
related to ESG
18

19. Regulatory Frameworks and standards
Regulatory developments
related to ESG
19

20. ESG Rating Agencies
Regulatory developments
related to ESG
20

21. Global Trend Towards ESG Regulation
–Governments and regulatory bodies worldwide are
increasingly focusing on ESG issues
–Countries are implementing new laws and guidelines to
address environmental, social, and governance concerns
–ESG regulations are becoming an integral part of corporate
reporting and compliance
Evolving regulatory
landscape
21

22. Diversity of ESG Regulations
– Different regions and countries have varying ESG reporting
and disclosure requirements
– Companies operating in multiple jurisdictions must navigate
a complex web of regulations
– Harmonization efforts are underway, but standardization
remains a challenge
Evolving regulatory
landscape
22

23. Strengthening Reporting Obligations
–Regulators are placing greater emphasis on ESG
transparency and disclosure
–Companies are required to provide detailed ESG information
in their annual reports
–Investors and stakeholders are demanding more
comprehensive ESG data for decision-making
Evolving regulatory
landscape
23

24. Growing Demand for Climate Reporting
–Climate change is a prominent focus of ESG regulations
globally
–Companies are required to disclose their carbon emissions,
climate-related risks, and mitigation strategies
–Compliance with the Task Force on Climate-related Financial
Disclosures (TCFD) is gaining traction
Evolving regulatory
landscape
24

25. Social and Human Rights Regulations
–Increasing attention is being given to social issues, such as
human rights and labor practices
–Regulations address workforce diversity, employee welfare,
and supply chain labor standards
–Companies must demonstrate a commitment to ethical
business practices and responsible sourcing
Evolving regulatory
landscape
25

26. Governance and Board Diversity
–Corporate governance is a critical aspect of ESG regulations
–Regulations aim to enhance board diversity, transparency,
and shareholder rights
–Companies must establish robust governance structures to
ensure accountability
Evolving regulatory
landscape
26

27. Continuous Updates and Compliance Challenges
– The regulatory landscape is continuously evolving with new
guidelines and amendments
– Companies face the challenge of keeping up with changing
regulations and updating their reporting practices
– Non-compliance with ESG regulations can result in
reputational risks and legal consequences
Evolving regulatory
landscape
27

28. How is this Integrated?
– Core Company Strategy to include ESG credentials
– An ESG strategy cannot be separate from the broader
organizational strategy
– ESG ratings form part of decision
Integrate ESG factors into
operational processes
28

29. 1 2
Understanding ESG ESG Strategy Development
- Set Goals
- Benchmark analysis
- Identify Risk and Opportunities (materiality), Gap Analysis
- Select ESG KPIs, develop Data Collection and Reporting
3 Implementation
- Awareness raising and capacity building
- Structure, processes, culture, infrastructure
- Integration into business strategy and decision
making
4
29
A better
World
Monitoring and Evaluation
- Awareness raising and capacity building
- ESG measurement and reporting
- Improvement
- Long-Term Perspective, continuously evolve to
respond to changing ESG priorities and global
challenges
Integrate ESG factors into
operational processes

30. Success Factors
– Emphasis on Material Issues: Priority is given to the most
material issues from a financial, environmental, social and
governance standpoint
– Strategic Alignment: The emphasis on materiality allows for
the development of an ESG strategy that is fully integrated
with the broader strategy
– Board Leadership and Oversight: The Board and top
management will own the strategy and oversee its
implementation
Integrate ESG factors into
operational processes
30

31. Success Factors
–Innovative Programs and Policies: Introduction of new
policies, procedures, and technologies to achieve the
company’s long-term strategic objectives
–Metrics and Goals: The implementation program includes
quantitative and qualitative objectives which can be monitored
to measure the company’s progress towards its goals
–Monitoring: The implementation should allow for regular
assessment of the effectiveness of the various programs, so
that the company can make adjustments for improvement
Integrate ESG factors into
operational processes
31

32. Pitfalls to avoid
– Excessive Focus on Ratings
– ESG Solely as a Communications Effort
– Lack of Board and Management Oversight
– Disconnect from Business Strategy
– Inconsistencies across the organization
– Lack of Assessment and Monitoring
– Greenwashing
Integrate ESG factors into
operational processes
32

33. ESG key performance indicators, or KPIs, are trackable
figures meant to help firms understand the
environmental, social and governance impact of their
operations
– Greenhouse gas emissions
– Employee working conditions
– Workplace and leadership diversity
Measuring and Reporting on
ESG Performance
33

34. Understanding relevant KPIs for environmental, social,
and governance factors
Tailoring KPIs to business objectives and stakeholder
demands
Measuring progress and setting ambitious sustainability
goals
Measuring and Reporting on
ESG Performance
34

35. Example KPIs for Tracking ESG Performance: Materials
Measuring and Reporting on
ESG Performance
35
Environmental Social Governance
% of energy in kwh from renewable
energy sources as of total energy
consumed
% of revenues from repeat business as of
total business
Contributions to political parties
as percentage of revenues
% of energy in kwh from combined
heat and power generation as of
total energy consumed
Total spendings on product safety /
revenue
Waste by unit produced
% of product recalls for safety or health
reasons as of total recalls
% of waste recycled
Spendings on product safety per unit
produced
Energy Efficiency Energy
Consumption Total
% of revenues from repeat business as of
total business

36. Example KPIs for Tracking ESG Performance: Transportation
Measuring and Reporting on
ESG Performance
36
Environmental Social Governance
% of energy in kwh from renewable
energy sources as of total energy
consumed
Risk - Total Litigation Payments
Contributions to political parties as
percentage of revenues
Energy Efficiency Energy
Consumption Total
% of suppliers and supply chain
partners screened for accordance with
ESG-criteria as of total supply chain
NO, SO Emissions by passenger-km
Total spendings on product safety /
revenue
NO, SO Emissions by passenger-mile
% of product recalls for safety or health
reasons as of total recalls
NO, SO Emissions by cargo-km
Spendings on product safety per unit
produced

37. Example KPIs for Tracking ESG Performance:
Commercial Services
Measuring and Reporting on
ESG Performance
37
Environmental Social Governance
% of energy in kwh from renewable energy
sources as of total energy consumed
Total cost of relocation in $, including
indemnity, pay-off, outplacement,
hiring, training, consulting
Contributions to political
parties as percentage of
revenues
% of energy in kwh from combined heat and
power generation as of total energy
consumed
% of satisfied customers as of total
customers
Water Consumption
% of revenues from repeat business as
of total business
Benchmark Water Consumption Total Board Members
Waste Consumption Female Board Members
Benchmark Waste Consumption Male Board Members
Energy Consumption Total Number of Executives

38. Techniques for Data Collection, Analysis, and Disclosure
–Gathering reliable and relevant data from internal and
external sources
–Streamlining data collection processes with automation and
digital tools
–Validating data accuracy and completeness
–Leveraging third-party verification and assurance
Measuring and Reporting on
ESG Performance
38

39. Enhancing Transparency and Credibility Through ESG
Reporting
–Crafting clear and concise ESG reports
–Aligning reporting with global standards
–Contextualizing data and sharing insights into the
organization's ESG journey
–Trust and engaging stakeholders through transparent
reporting
Measuring and Reporting on
ESG Performance
39

40. Importance of Stakeholder Engagement
–Understand and communicate the significance of engaging
stakeholders in the ESG integration process
Identifying and Prioritizing Stakeholders
–Identify key stakeholders relevant to ESG initiatives
–Prioritize stakeholders based on their influence and impact
on the organization
Effective stakeholder
engagement
40

41. Strategies for Meaningful Engagement
–Foster effective communication techniques to foster
stakeholder buy-in
–Implement strategies to build trust and collaboration with
stakeholders
Leveraging Stakeholder Feedback
–Utilize stakeholder feedback to inform ESG strategies and
decision-making
–Demonstrate the value of stakeholder input in shaping long-
term sustainability goals
Effective stakeholder
engagement
41

42. Case Study – DHL
42
DHL, a global logistics and supply chain leader,
recognized the importance of ESG principles in
driving sustainable growth while meeting the
evolving expectations of stakeholders
This case study illustrates how DHL incorporated
ESG considerations into its operations,
demonstrating its commitment to responsible and
innovative business practices

43. Case Study – DHL
43
Environmental Responsibility
–DHL established ambitious environmental goals,
including a commitment to achieving zero emissions
logistics by 2050
–The company has been adopting cleaner
technologies, such as electric and hybrid vehicles, and
has implemented energy-efficient measures across its
facilities
–DHL invests in innovative solutions for route
optimization, reducing fuel consumption, and lowering
carbon emissions

44. Case Study – DHL
44
Social Impact
– DHL places a strong emphasis on employee well-
being, health, and safety
– It ensures a positive work environment and provides
ongoing training and development opportunities for its
workforce
– The company promotes diversity and inclusion within
its teams, recognizing the value of a diverse workforce
in fostering innovation and driving success

45. Case Study – DHL
45
Governance Excellence
– Adheres to high ethical standards, transparent
governance, and responsible business practices
– The company has clear policies in place for
responsible supply chain management, ensuring that
suppliers adhere to ethical and environmental
guidelines

46. Case Study – DHL
46

47. Case Study – DHL
47

48. Case Study – DHL
48
Materiality
Analysis 2021

49. Case Study – DHL
49
Stakeholders

50. Case Study – DHL
50

51. Case Study – DHL
51
KPIs

52. Case Study – DHL
52
ESG Ratings

53. Case Study – DHL
Operational Benefits
53
Efficiency and Cost Savings
– Reduced fuel consumption, lower operating costs, and
increased efficiency
– Energy-efficient practices have contributed to cost
savings while aligning with the company's commitment
to environmental responsibility
– The company promotes diversity and inclusion within
its teams, recognizing the value of a diverse workforce
in fostering innovation and driving success

54. Case Study – DHL
Operational Benefits
54
Attracting Sustainable Partnerships
– ESG initiatives have enhanced its reputation as a
reliable, environmentally conscious partner, attracting
businesses seeking to align their supply chains with
sustainability goals
– The company's commitment to responsible practices
has resulted in long-term partnerships with
environmentally conscious customers

55. Case Study – DHL
Operational Benefits
55
Stakeholder Trust and Industry Leadership
– Proactive approach to ESG has built trust among
stakeholders, including customers, investors,
employees, and regulatory bodies
– By leading in ESG integration within the logistics
industry, DHL sets an example for other companies,
influencing positive changes in the sector

56. Case Study – DHL
56
ESG into its operations underscores the
company's commitment to creating long-term
value while considering the impact on the
environment, society, and governance
This case study showcases how DHL's proactive
approach not only contributes to operational
excellence but also serves as a catalyst for
positive industry transformation, emphasizing the
importance of sustainable business practices in
today's business landscape

57. ESG KPI Development for XYZ Beverage
Manufacturer
57
XYZ Beverage Manufacturer is a global company
known for its diverse product range, which includes
soft drinks, juices, and bottled water. As part of its
commitment to sustainability, XYZ Beverage
Manufacturer aims to develop ESG KPIs to monitor
and improve its environmental, social, and
governance performance.
Materiality Issues
Environmental (E):
Issue 1: Carbon emissions from manufacturing and
transportation.
Issue 2: Water usage and conservation.

58. ESG KPI Development for XYZ Beverage
Manufacturer
58
Materiality Issues
Social (S):
Issue 1: Employee well-being and diversity.
Issue 2: Supply chain labor practices.
Governance (G):
Issue 1: Board diversity and independence.
Issue 2: Anti-corruption and ethical business
conduct.

59. ESG KPI Development for XYZ Beverage
Manufacturer
59
Developing and implementing ESG KPIs is a
critical step for XYZ Beverage Manufacturer to
demonstrate its commitment to sustainability and
align with global ESG trends.
Brainstorm potential ESG KPIs for XYZ Beverage
Manufacturer
Environmental Social Governance

60. Through this session, you should have:
– Comprehend the importance of ESG principles and
the evolving regulatory landscape
– Obtain practical tools and methodologies to assess,
and integrate ESG factors into operational processes
–Gain insights into measuring and reporting ESG
performance to enhance transparency and
accountability
– Apply effective stakeholder engagement techniques
to achieve successful ESG integration and drive
sustainable outcomes
Take-aways
60

61. Thank You
Abbigail Meah-Ali – Phone: (868) 753-3400 – Email: abbigailali@yahoo.com
Questions?