ESG GUIDE

Foundations of Environmental,
Social and Governance (ESG)

Fulya Kocak, LLC

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ESG Guide
Introduction
This ESG guide is prepared to summarize core ESG concepts, why there is so much momentum
around ESG commitments, reporting and investing and upskilling opportunities around this topic.

ESG is the acronym for Environmental, Social, and Governance, three broad areas of consideration for
investors, corporations, and other stakeholders.

Although ESG discussions have been popular in the recent years, many traditional aspects of how a
business is run, ethically managed and responsibly operated are in fact nothing new.

What is ESG?
ESG is a company's performance and risk exposure in the context of its environmental impact, social
responsibility, and how it is governed.

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ESG, sustainability or corporate social

responsibility?
Although the term ESG is sometimes used synonymously with sustainability or corporate social
responsibility, there are a few key differences.

ESG is incorporated into financial decision-making by using relevant environmental, social and
governance metrics to better understand how these factors influence the company, and how the
company influences these f ESG is incorporated into financial decision-making by using relevant
environmental, social and governance metrics to better understand how these factors influence the
company, and how the company influences these factors. ESG efforts focus on short-, medium- and
long-term performance and value creation while addressing material environmental, social and
governance risks.

ESG goes beyond initiatives and programs into a strategy that is ideally integrated into the broader
corporate strategy to address stakeholder demands, primarily from investors and/or regulators, such
as climate related disclosure mandates. ESG in practice involves rigorous goal setting,
implementation, measuring and reporting on environmental, social, and corporate governance
activities.

On the other hand, CSR and sustainability initiatives may focus on environmental leadership and
corporate giving and volunteering initiatives without necessarily integrating these into business value
creation and risk management. CSR and sustainability programs are often part of a well-organized
ESG strategy but are not equivalent to one.

Demand for ESG

While ESG has gained in attention in recent months, many practices that fall under ESG performance
have been managed by organizations for years, such as employee wellness and health, responsible
consumption of resources, and governance practices. The difference today is that ESG brings together
efforts that have previously been taking place in silos under one umbrella in an organized and
strategic fashion and facilitates disclosure using meaningful metrics.

This is especially true for publicly traded companies, which are asked by their investors to set clear
ESG targets to reduce their negative impact and risks, measure their progress towards these targets,
and report on these transparently, accurately, and consistently.

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The COVID-19 pandemic’s devastating impact on people and communities, and the supply chain
disruptions that resulted, combined with recent social unrest and climate change events have
become living proof of environmental and social risks that have deeply impacted many businesses
and individuals — seemingly overnight. These disruptions increased demand for ESG more in the past
two years than over the past two decades.

ESG Drivers

Companies have a variety of motivations to build and advance their ESG programs, but it often comes
down to a combination of drivers, including investor demand, workforce pressure, enterprise risk
management, and/or creating competitive advantage. There are three major drivers that contribute
to the increased uptake of ESG in the corporate world.

The first driver of the rapid expansion of ESG is customers and employees looking for alignment of
their values with organizational mission and purpose.

According to a survey conducted by PwC, 83% of consumers think companies should be actively
shaping ESG best practices, and 86% of employees prefer to support or work for companies that care
about the same issues they do.

Customer and employee demand to make a difference around climate change action and social
justice will continue to transform organizations.

The second driver is increasing investor demand, including from both individual investors and large
institutions, looking to use their capital to make an impact while avoiding risks and providing share
value.

According to the US SIF Foundation's 2020 Report on US Sustainable and Impact Investing Trends,
U.S. assets under management using ESG strategies increased by 42% from $12 trillion to $17.1
trillion between 2018 and 2020.

Bloomberg Intelligence reports that ESG assets may reach $53 trillion by 2025, which represents a
third of global AUM.

The third driver is regulatory pressure that continues to build around the world. Governments
globally are enacting new regulations to curb carbon emissions and deliver against their
commitments to Paris Agreement.

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Examples include a European Union regulation that aims to cut carbon emissions by at least 55% by
2030; a U.K. government commitment to reduce carbon emissions by 78% by 2035; and a U.S. pledge
to cut carbon emissions by 50-52% by 2030.

Pressure and demand for robust ESG programs and disclosures with accurate, material and decision-
useful, consistent data will only continue in the next few years.

Benefits of ESG
The New York University Stern Center for Sustainable Business reviewed 1,000 research papers from
2015–2020 and found a positive relationship between performance-based ESG measures and
financial performance.

A strong ESG strategy provides opportunities to tap into new markets and increase presence in the
existing ones. Contrary to this scenario, a company associated with environmental or social wrong
doing, such as human rights violations or environmental harm, may lose customers and face
shutdowns, fines or strained community and labor relations.

Companies with strong ESG programs can also benefit from cost reduction through decreased- or
avoided- resource use. Minimized energy, water and raw material consumption, results in maximized
savings while increasing ESG performance scores.

However, it is also important to note that ESG programs require resource allocation for full-time staff
or service providers and additional capital expenses for sustainability initiatives. When making
decisions, costs and benefits should be strategically analyzed.

Integrating ESG into business practices results in improved investor relations and the attraction of
capital. Increasingly, investors are looking for companies that are best prepared for transition to low
carbon economy and climate change adaptation.

Strong ESG practices and accountability measures also reduce risk exposure in environmental and
social contexts. Examples to these risks include supply chain disruptions and controversies, climate
change risks, corruption and bribery, and incompliance related fines as well as business reputation
risks.

Every company is exposed to a variety of financial or reputational risks. ESG risks are those that are
related to an organization's environmental or social impact as well as both the environment's - and
stakeholder's impact - on the organization itself.

The most common types of ESG risks include:

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• Physical climate risks, including sea level rise and more frequent climate events, such as
flooding, storm surges, wildfires, and hurricanes
• Transitional climate risks, including regulatory changes, such as carbon tax and more stringent
building codes, and reputational risks associated with transitioning to a low-carbon economy.
• Environmental management and compliance risks, including potential fines and stop work
orders, working safety conditions, human rights violations, weak anti-bribery and corruption
practices, increased costs or other burdens due to existing and new laws and regulations, and
cyber security and privacy related risks

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Sustainable Investing
The United Nations’ Principles for Responsible Investments, (UN PRI), defines responsible investment
as a strategy and practice to incorporate environmental, social and governance (ESG) factors in
investment decisions and active ownership.

ESG investing, sustainable investing, socially responsible investing, and impact investing all have
subtle differences from one another, but each of these refers to investing based upon environmental,
social, and governance (ESG) factors to better manage risk, leverage opportunities, and generate
strong long-term returns.

Although "sustainable investing" and "responsible investing" are phrases that are often used
interchangeably, Bridges Fund Management published a study in 2015, that differentiates between
“sustainable investing” and “responsible investing,” two terms that are often used interchangeably:

Responsible Investment seeks to "mitigate risky ESG practices in order to protect value," while
Sustainable Investment aims to "adopt progressive ESG practices that may enhance value."

Investment managers are being called upon to analyze how well a company balances the issues of
their shareholders, employees, customers, and community while delivering both financial returns and
social impact for their clients.

ESG investment approaches can be grouped into five categories:

• Screening - (can be done by Negative screening and Positive screening)
• ESG integration
• Thematic investing
• Engagement/active ownership
• Impact Investing

Screening

According to UN PRI, both positive and negative screening utilize sets of filters to determine which
companies or sectors are eligible or ineligible for investment in a particular portfolio. This criterion
might be set according to an investor's values and ethics, or simple preferences or based on the
policy of an asset manager or owner.

A screen might be used to exclude the highest GHG emitters from a portfolio (negative screening) or
to target only the lowest emitters (positive screening). Positive screening focuses on best-in-class
companies or investments. Screening is one of the most widely used approaches to responsible
investment policy.

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ESG Integration

ESG Integration refers to the systematic inclusion of ESG factors in investment decisions, with the
goal of better management of risks and improvement of returns

For BlackRock, the largest investment management firm in the world, ESG integration is the practice
of incorporating ESG data, research, and insights into investment decisions to enhance risk-adjusted
returns. This is used regardless of whether an investment strategy has a sustainable mandate.

Lowering risk while generating returns is a key component of ESG integration. Analyzing ESG factors is
a way of identifying and avoiding risk in a company or sector. Those with ESG integration approaches
also use ESG data to look for investment opportunities. For example, they might analyze the
automotive industry and observe how different companies are adapting to trends in electrification,
and factor this into revenue forecasts.

Materiality is a key component of ESG integration. Investment managers assess the material issues
for a particular sector - those that are considered very likely to impact overall corporate and
investment performance.

According to the Schroders Institutional Investor Study 2021 – spanning 750 institutional investors,
collectively responsible for $26.8 trillion in assets – ESG integration to the investment process was the
most preferred approach to sustainable investments.

Thematic Investing

Thematic investing refers to the investment in specific solutions to ESG-related issues. For example,
an investor could target solutions for renewable energy and focus their investments on solar and
wind power technologies.
Investors using a thematic investing approach will identify a particular ESG-related trend, such as
solar energy, carbon recapture, or internet accessibility, and invest in companies that are in that
space.

Impact Investing

Unlike passive funds, active engagement based on sustainable investing approach provides investors
with the opportunity to leverage their ownership to make an impact. These investors engage with the
companies in which they are invested to understand their ESG strategies and impacts, and encourage
attention in ESG factors that they consider important.

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Impact investing involves a strategy to address specific ESG goals and generate a financial return by
investing in companies whose core operations address or attempt to solve a social or environmental
challenge. Impact investors tend to invest in funds, projects, or companies that might not have
otherwise been funded.

This strategy specifically targets companies and projects for their potential social and environmental
benefits. Social enterprises, or companies that exist for the dual purpose of generating revenue and
providing a social benefit, and environmentally related technology companies are often a target of
impact investing.

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ESG Materiality
Materiality is a key component of ESG integration. Investment managers assess the material issues
for a particular sector - those that are considered very likely to impact overall corporate and
investment performance.

The “E” of ESG

The environmental pillar of ESG is all about an organization's processes, policies, practices and
impacts as connected to its relationship with the natural environment.

The World Economic Forum has identified seven major themes of environmental topics across
existing ESG reporting frameworks and standards. These include:
• Climate change
• Nature loss
• Freshwater availability
• Air pollution
• Water pollution
• Solid waste, and
• Resource availability

In addition to these broad environmental themes, some of the most considered specific
environmental topics include:

• Energy management, which addresses environmental impacts that result from energy use.
This includes energy efficiency, energy use intensity, and the percent of energy sourced from
renewables, known as "energy sourcing."

• Greenhouse Gas Emissions (referred to as GHG emissions), which covers direct and indirect
greenhouse gas emissions that result from a company's operations. Many organizations
report on their greenhouse gas mitigation strategy, carbon reduction goals and carbon
emissions metrics.

• Greenhouse gases are most often spoken of in terms of Carbon Dioxide (CO2) or Carbon
Equivalents (CO2e) because CO2 is the primary greenhouse gas emitted through human
activities. Other impactful greenhouse gases include methane (CH4), nitrous oxide (N2O), and
ozone (O3).

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• Climate Change, including a company's exposure to physical climate risks, or transitional risks.
Climate change is the most critical environmental risk.
• Biodiversity Loss refers to a decline in the number of species found in a particular area.
Species extinction and loss of habitat can have cascading impacts in the ecology of a region,
and ultimately result in food scarcity, among other negative environmental impacts.

• Water management refers to the efficient usage and treatment of water, especially important
in regions coping with long seasons of droughts.

• Waste management refers to disposal, reduction, reuse, and prevention of waste. You might
have heard of the term “circularity” as a part of sustainability and ESG efforts by
manufacturers.

• A “circular economy” model goes beyond traditional waste management and focuses on
efficient use of natural resources, reuse, recycling and innovative manufacturing strategies,
supporting the development of new industries and jobs while reducing waste and emissions.
In a truly “circular economy” materials never leave the production cycle and are instead
recycled, reused, or remanufactured at the end of their useful life.

Since businesses and industry sectors interact with the natural environment in unique ways, from
operations and supply chain management to products or services, the environmental issues and level
of their importance vary widely.

The “S” of ESG

The social pillar of ESG is all about the "People," both internal and external—with whom an
organization interacts. The social aspects of ESG include an organization's processes, policies,
practices, and impact with regard to people, including its workforce, customers, investors, regulators,
suppliers, and the communities it operates within.

There are a broad range of "people"-related issues depending on what a company does, where it is
located, and how it operates. The World Economic Forum identified three themes among people-
related topics across existing ESG reporting frameworks and standards:
• Dignity and equality
• Health and well-being, and
• Skills for the future

Unlike environmental issues, which vary widely depending on the business operations and
environmental impact, there are common social factors that most companies address. For example,

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health and safety, human capital management, and community engagement and service are topics
that are likely applicable to any organization.

Health and safety addresses working conditions that are free from hazards that risk health and lives.
It includes safety management plans, training, inspections and monitoring, and tracking and
compliance.

Human capital management addresses diversity, equity, and inclusion, fair pay, employee retention,
career development and health and wellbeing.

Supply chain management addresses the management of environmental, social and governance of
an organization's supply chain, including vendors, suppliers, and contractors. For example, a company
headquartered in the US may have significant impact on working conditions and fair pay of workers
thousands of miles away from its physical location.
Social aspects of supply chain management cover human rights, including child labor, modern slavery,
wages and working conditions. Even companies that do not have complex supply chains should
consider taking their vendors' social policies and practices into consideration when making
procurement decisions, to do the right thing and avoid reputational risk.

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The “G” of ESG

Corporate governance refers to the system of controls, processes, and procedures by which a
company is managed, and decisions are made.
Corporate governance policies and practices focus on accountability, fiduciary duty and mechanisms
of auditing and control

Strong corporate governance also ensures that a corporation conducts its business ethically with
honesty, trust, transparency, and fairness.
The governance pillar of ESG addresses overall corporate board and management structures,
company governance policies, such as anti-corruption and whistle blower policies, executive
compensation, tax and accounting practices, and cyber security.

In addition to these traditional governance factors, governance of ESG is increasingly becoming an

area of focus for both investors and public companies
For example, executive compensation tied to various ESG-related metrics is becoming more common.
Board-level oversight of a company's ESG policies and initiatives, ideally through a dedicated ESG
committee in the board charter demonstrates that company’s commitment to managing ESG risk and
performance.

Investors typically screen for governance practices, as they would for environmental and social
factors. Negative screens can be used to rule out companies whose governance policies and practices
expose them to unacceptable levels of risk. The investors may exclude a company that is involved in
legally or ethically questionable practices, or another one that doesn't address long-term risks to its
business, such as the risks presented by climate change.

Positive screens can be used to identify companies with strong and transparent governance policies
and practices. Companies with strong governance practices are less likely to be involved in
controversies and risky behavior.

ESG Factors, also called ESG criteria, are various environmental, social or governance topics that
organizations identify as relevant to their businesses or investment decisions.

The most common E, S and G factors

Environmental factors common for most industries and business types include climate change risks
and opportunities, greenhouse gas emissions, energy, water and other resource use reduction, and
waste management. Under the Social pillar, the most common factors include diversity, equity and

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inclusion, health and safety, human rights and working conditions, stakeholder engagement and
human capital management. The Governance pillar includes traditional governance factors, such as
executive compensation, shareholder rights, various governance policies, as well ESG governance
related factors, such as board-level ESG oversight.

Each ESG factor is expected to have one or multiple associated metrics that provide consistent
decision-making data points for investors, and any other interested stakeholders, such as the
government, customers, and employees. The best metrics are measurable, decision-useful and
verifiable.

Currently, there is not one single standardized approach to identification and calculation of different
ESG factors and metrics. Investors typically collect publicly disclosed ESG data through either third-
party ESG rating subscriptions or their in-house resources. They may then create an internal
methodology to address ESG considerations for decision-making based on the priorities and risks they
identify. All ESG factors are not equal when measuring overall ESG performance. Each ESG factor is
typically weighted based on its materiality and financial impacts.

Typically, environmental metrics are more easily quantifiable, compared to social or governance
metrics. For example, Energy Management disclosures cover metrics related to energy efficiency and
conservation for all company operations and products, with an emphasis on the use of renewable
energy.

When it comes to social factors, it may be more challenging to identify tangible metrics, but there are
still numbers that can be used to measure performance. For example, an increasingly important
social factor, human capital management which typically covers a company’s policies and practices
related to its workforce.
Examples of human capital management metrics:
• Percentage of total employees receiving regular performance and career development
reviews during the reporting period
• Total number and rate of new employee hires and turnover, and
Average hours of training and development completed per employee

Even within the same industry, different companies will have different ESG factors identified as core
to their businesses. At this time, how factors are identified, and metrics are determined is still
evolving, connecting the dots between the disclosed information to business value and
environmental and social benefits.

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ESG Reporting

ESG reporting is disclosing factual and relevant ESG data and information on commitments,
initiatives, policies, and progress along with associated ESG risks and how these risks are managed. In
traditional financial reporting, public companies report revenues and expenses to inform investor
decisions. ESG reporting is also increasingly used by investors and includes a wide variety of metrics
for decision-making in addition to financial disclosures.

ESG reporting is anything but a PR exercise. Its purpose is to provide comparable and useful
information to various key stakeholders.
Reporting companies typically pick and choose one or more reporting formats among over a dozen
common ESG reporting frameworks that best suit their motivations for disclosure.

Availability of multiple ESG reporting options may result in organizations spending a large portion of
their resources on reporting to various frameworks. On the other hand, investors and other
stakeholders face challenges to compare ESG performance and risk exposure across companies and
industries as apples to apples since each reporting framework has its own sets of metrics and
methodologies.

Voluntary ESG Reporting

The same question always comes up during conversations with companies early in their ESG reporting
efforts: Which ESG reporting framework should we pursue? Here are a few helpful tips to make that
decision:

1. Companies should strategically choose the ESG reporting guidance or framework based on
their priorities and motivations. It is a good idea to be very clear about "why" are we reporting
question before starting.
2. Find out what information key stakeholders are requesting for decision-making and choose
an option that aligns with their needs.
3. Consider where stakeholders get this information? A GRI aligned CSR report, a third-party
rating agency, your website, etc.

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ESG reporting options are plentiful for companies looking for ways to disclose on their ESG efforts.
Some of these may focus on a specific theme, such as climate change risk and or a set of targeted
constituents, such as investors looking for ESG-based financial information.

ESG reporting frameworks fall into two general categories:

• ESG Reporting Standards
• ESG Reporting Surveys (questionnaires)

In addition to these categories, there are also third-party ESG ratings, which will be discussed later.

ESG reporting standards are voluntary and provide a standardized structure that lends to high quality
reporting on ESG issues. For example, The Global Reporting Initiative (GRI) Standards offer multiple
modules that a company can choose from based on what is material for the organization. GRI
Standards are used by thousands of companies around the world and are usually published within or
alongside their standalone sustainability or social responsibility reports.

The Sustainability Accounting Standards Board (SASB) standards are industry-specific disclosure
standards with a purpose to communicate financially material, decision-useful information across
environmental, social, and governance topics between companies and investors. Available for 77
industries, the standards identify the subset of environmental, social, and governance issues most
relevant to financial performance in each industry.
The Task Force on Climate-related Financial Disclosures, TCFD, is a guidance framework that focuses
on management strategies and governance for reporting climate risk. The Financial Stability Board
created TCFD to improve and increase reporting of climate-related financial information. TCFD
framework recommendations are structured around four thematic areas that include governance,
strategy, risk management, and metrics and targets.

In March 2022, the International Sustainability Standards Board (ISSB) launched consultations on two
proposed standards—one on general sustainability-related disclosure requirements and one on
climate-related disclosure requirements. These exposure drafts build upon the recommendations of
the TCFD and include industry-based disclosure requirements derived from SASB Standards. As of this
writing, these standards are in progress and expected to be finalized by the end of 2022. These two
standards are important global ESG standards to stay informed about.

ESG standards provide guidance and consistency while ensuring disclosure quality, but do not score
companies for their ESG performance. ESG surveys or questionnaires on the other hand score
companies based on voluntary responses to a set of questions.

For example, CDP (formerly called Carbon Disclosure Project) covers climate, water, and forest
disclosures. A company that chooses to participate in CDP's climate framework, provides answers to
various metric and narrative based questions on climate risks and opportunities as well as the

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governance of these risks. This company then receives a score between ‘A’ and ‘F’. An ‘A’ is achieved
by the leading companies and cities who are placed in CDP's ‘A list’. Company and city scores are
publicly available if you are interested in searching for your company or city, or one that you interact
with.

Another voluntary ESG questionnaire is the S&P Global Corporate Sustainability Assessment, an
annual survey that covers thousands of companies from around the world. Companies are invited to
participate and receive a CSA Score that informs several sustainability indices.

It is important to understand the ESG reporting landscape and the challenge of consistency and
comparability of ESG information from company to company. ESG reporting efforts could get
resource intense if they are not managed strategically, especially since there is an abundance of ESG
reporting frameworks to choose from.

ESG Ratings

ESG ratings measure a company's ESG commitment, performance, and accountability as well as its
exposure to environmental, social, and governance risks. Investors typically use ESG ratings to gain a
broader understanding of a company's performance beyond financial bottom line.

ESG rating agencies score companies regardless of whether that company wants to participate or not.
Although many companies voluntarily report on their ESG efforts publicly, raters enable stakeholders
to compare this information against even companies that do not disclose. Third parties can easily
scrape websites and public reports for ESG indicators and can incorporate that data into information
sets that they provide to their subscribers.

Typically, a high ESG score means a company is managing its environmental, social, and governance
risks well relative to its peers. A poor ESG rating indicates higher unmanaged exposure to ESG risks.
MSCI rates companies from Triple C to Triple A, laggard to leader.

The primary subscribers for ESG ratings are the investors who are looking for a way to screen and
evaluate companies in their various funds and portfolios.

Investors use these ratings in various ways, including:

• As a supplement to financial analysis for insights into the environmental, social and
governance risks not covered in financial reporting
• As a screen to identify companies that are good corporate citizens and environmental
stewards while excluding low scoring ones that don't meet investor standards
• For monitoring owned companies, for example, a low ESG flags concerns for the investor, so
that they engage with the company to understand the issues and ask for improvement.

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Some of the commonly referred to ESG rating agencies are listed below. Review their ratings and
methodologies for further insights:

MSCI ESG Ratings

Sustainalytics ESG Risk Ratings
Bloomberg ESG Scores
FTSE Russell’s ESG Ratings
ISS Ratings and Rankings
S&P Global ESG Score
Moody’s ESG Assessments and Climate Risk Scores

Greenwashing

With increasing focus put on ESG as a consideration factor for customers and investors, concerns
around greenwashing are increasing rapidly. Greenwashing describes misleading environmental
claims about how "green” or “sustainable,” or "socially responsible" a product, service, investment
offering, or a brand is by misrepresenting or overstating its qualifications.

Greenwashing could be as simple as calling a product ecofriendly or green when this product causes
significant harm to the environment. This could also be the case at the corporate level, such as a
corporation making a misleading carbon-neutrality claim, when there is no substantiating data to
verify this claim.
Regardless of the intentions, which could be a marketing exercise that exaggerates a product's
greenness or a misinformed statement that a company leader makes publicly, greenwashing has
severe consequences, including legal actions and fines.

According to a survey conducted by PwC in 2021, 83% of consumers think companies should be
actively shaping ESG best practices and are willing to pay a premium when they choose an
investment, service or a product that is aligned with their values.

ESGwashing, or greenwashing takes advantage of stakeholders who are made to believe that they are
making good choices for the environment and the society by choosing a brand that is not fully honest
in its statements.

The concerns are even higher when it comes to “greenwashing,” or ESG washing in the field of
sustainable or impact investing. Customers choose these investment options because they are
looking for an aligned mission to make positive environmental and social impact while achieving
financial returns through their capital.

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A sustainable investment methodology may favor one area of impact while causing significant
environmental or social concerns elsewhere, such as investing in companies with high carbon
footprint, waste production or heavy pollution. This could also include social concerns with invested
companies, such as human right violations and unfair pay.

To avoid greenwashing, there are few things to pay attention to:

• Do not make written or verbal ESG claims publicly based on unverified information.
• Public statements should be clear, concise and data-driven. This includes websites, standalone
sustainability reports, not just financial statements.
• Coordinate written narrative around ESG efforts across all relevant departments, including
legal, accounting, communications and marketing, and sustainability departments

It is important to pay close attention to your actions and statements to avoid greenwashing on day 1.
As a consumer, combat greenwashing by keeping informed and doing your research when making
sustainable purchasing or investing decisions, instead of taking marketing and communications at
face value.

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ESG Upskilling
As ESG integration into businesses and investments gains momentum, upskilling employees in key
environmental and social areas makes sense. Robust ESG disclosure practices is an area that requires
new skills and knowledge.

Strong ESG programs are almost always a result of involving all business departments and the
workforce in ESG integration, with a clear distribution of roles and responsibilities. This approach
aligns all employees with a common purpose and goals that go beyond the sustainability or ESG
department carrying the sole responsibility for ESG.

Here is an example: A company identifies its greenhouse gas emissions as a key ESG concern and sets
an ambitious GHG emission goal. To achieve this goal, all key stakeholders work on upskilling their
existing skillset from the board of the directors to the boots on the ground workforce. This can be
done by education, clear communication and asking all players to come up with innovative and cost-
effective ways of reducing carbon emissions by keeping safety, budgets, quality, and schedule on
track.

On the social side, say that a company set goals around a creating a diverse, inclusive, and equitable
workforce. Managers will need to learn best practices for providing equitable opportunities to their
team members, human resources must expand their capabilities to implement just recruitment,
career development and retention policies, and ESG teams must learn how best to track and report
key performance indicators. This effort also brings a great opportunity for inclusive leadership and
unconscious bias training for all employees.

If you are not sure about where to start with your upskilling and educational efforts, there are some
foundational topics that are relevant regardless of your current discipline:

Climate risk and opportunities

ESG Reporting Frameworks, Standards and Guidelines, starting with GRI, CDP and TCFD.
Carbon/GHG Accounting
UN Sustainable Development Goals (SDGs)
ESG/Sustainable Investing,
Sustainable Finance, specifically Green, Climate and Social Bonds
Low Carbon Economy
Environmental and Social aspects of Supply Chain Management
Diversity, Equity and Inclusion
Human Capital Management and Accounting
Transition to Net-zero

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If you are interested in learning more about ESG concepts, please visit www.fulyakocak.com for
course offerings, resources, and tools.

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