Staying competitive in

a fast-changing world
Practical steps for future-proofing
your business
Business operates in a fast-changing world
Globally, the political landscape Unfortunately, decision-making and Climate-change; nature-loss and
is shifting and becoming more disclosure practices have not caught inequality are major challenges for
unpredictable; technology is up and often overlook crucial risks, which business will be expected
changing everything we do; opportunities and value drivers to develop solutions.
environmental pressures are related to environmental, social and
reaching alarming levels and tensions governance (ESG) issues and across This checklist can help your company
in society are rising in many parts of natural, social and human capital. manage these and other emerging
the world. issues in a comprehensive, strategic
As a result, boards sometimes miss and proactive way. Read through
In this context, - the purpose of material information that’s essential the steps, then select and adapt the
the economy and - within that - the for defining a robust and resilient actions that are most appropriate for
purpose of a company, is being corporate strategy. your company now, and those to plan
challenged. Focusing solely on profit for in the future.
maximization is no longer acceptable. This has to change.

Here are some tips for staying ahead

Understand your
key risks, opportunities,
Prepare your organization impacts and dependencies
for change by modernizing in the new global context
your corporate
governance

Staying
Build stronger competitive in a Integrate relevant
relationships
with banks and
fast-changing issues into risk
investors so that world management,
you can be fully performance
and adequately management and
rewarded decision-making

Tell key stakeholders

what you’re doing
in a strategic way
1. Prepare your organization for change
A changing world means a new stakeholder interest and that day- and risks – like those related
business landscape. In order to to-day business management is to environmental, social and
thrive, companies need to ensure conducive to long-term success. governance (ESG) issues.
their governance structures and
strategies are aligned with the It’s part of a board’s fiduciary duty ESG considerations apply to
times. to make sure it’s managing risks all businesses and should be
and opportunities across all areas. reflected across risk management,
In any company, the board is But, a board cannot reasonably performance and strategy.
responsible for ensuring that accomplish this if it isn’t addressing
strategic direction is aligned with expanded impacts, dependencies

Keep your board aware of new risks and opportunities

How is your organization managing new risks and opportunities across the changing business landscape?

Are the decision-makers in your company aware of these new risks and opportunities? If not, why not?
And if so, how are they responding?

Integrate discussions around sustainability into board

meetings and decision-making processes
Integrating ESG topics to board discussions is essential. Are conversations around ESG challenges
included in existing board meetings, or do you have a stand-alone committee to discuss these issues?

Include mandates, expertise and incentives for ESG-related risks and opportunities so the board can
see how these aspects might impact decision-making, risk management, performance management,
budgeting, capital allocation and investment decisions.

Link compensation to sustainability performance

Compensation is one of the most potent levers the board can use to encourage management to act.
By aligning executive incentives toward a wider range of priorities and goals - including those related to
social and environmental performance - the company can encourage and reward sustainable behavior
and spur stronger performance.

Getting started
• Explore the relationship between sustainability and corporate governance.

• Ensure robust internal controls throughout your company by using the latest guidance.

• Engage board members in governance workshops – designed to help boards deal with the new
and emerging challenges facing businesses today.
2. Optimize internal decision-making
When executives have reliable the decisions that will deliver the Many companies don’t know where
and relevant information about product and service innovations to start.
their risk and opportunity profiles, necessary for a flourishing society
they’re more capable of making and prosperous business. Here are some tips:

Measure and value impacts and dependencies

Before the 1990s, 80 percent of a company’s value was found in tangible assets such as plants, property
and equipment. Now, up to 80 percent is represented by intangibles — brand, ideas, relationships with
nature and society, skills and resources.

It’s in the best interest of companies to truly understand the relationships between their business models
and these intangibles because doing so helps lead to better corporate decision-making with positive
outcomes for and beyond the company.

Apply enterprise risk management to ESG-related

risks and opportunities
“Black swan” events are more frequent and severe than ever before.

Ten years ago, the top global risks in terms of impact included only one environmental risk. But today,
environmental and social risks account for most of the top risks in terms of impact and likelihood.

Ground-breaking solutions are available to help your company measure and manage these risks and
opportunities through strengthened enterprise risk management practices.

Move toward integrated performance management

Incorporate the new risks and opportunities you discover into your company’s established performance
management processes and functions like budgeting, forecasting, evaluation and appraisal. Make sure
they’re also reflected in corporate culture, values and leadership.

Getting started
• Explore, uncover and assess a broader range of your impacts and dependencies using
the Natural Capital Protocol and the Social & Human Capital Protocol.

• You can also use the NatCap Checker to check the maturity and robustness of your assessment.
Implement what you learn across your business strategy and decision-making practices.

• Apply WBCSD and COSO’s new guidance for applying enterprise risk management to ESG-related risks
and opportunities. It’s a step forward for your company in assessing and addressing new exposure
to emerging and previously unexpected risk.
3. Tell stakeholders what you’re doing
in a strategic way
Corporate reporting provides the impact of your business, setting information by markets for capital
bridge between a companies’ you up to be rewarded if you’re allocation is still limited. This is
performance and the capital managing risks and opportunities partially because much of the
markets. properly. ESG and sustainability information
provided is not standard,
Disclosing your company’s While the integration of ESG and comparable or material.
performance on a full range of ESG sustainability-related topics into
issues highlights the true value and business is improving, the use of You can help address this.

Focus on what really matters and make a plan

Sometimes, sustainability and ESG reporting tries to be “all things to all people.” It’s important to remember
that not all reporting is good reporting, and shorter or more concise is often better – so focus only on
what’s material.

Disclose what really matters to you and your key stakeholders and make a plan for your reporting strategy.

Understand what’s out there and what’s expected of you

Since 1992, there’s been more than a ten-fold increase in the number of corporate reporting requirements
related to ESG topics. Lack of coordination makes it frustrating, overwhelming and time-consuming for
businesses to keep up.

Make sure you understand the requirements your company faces, so you’re aware of what’s expected
of you.

Recognize what you do well and what can be better

Reporting on ESG and sustainability issues needs to be more than a “tick-box” exercise.

Learn how the sustainability reporting process can drive change inside your business, while effectively
meeting your stakeholders’ needs. Always strive for improvement.

Getting started
• Explore the new ESG Disclosure Handbook and library to understand which ESG and sustainability
metrics are the most important for your company.

• Check out the Reporting Exchange to understand regional requirements for what, where, how and when
to report – as well as to whom.

• Engage with Reporting matters to understand where your corporate sustainability reporting is strong,
where it can be better and where there are opportunities to feed the information you report back into
your corporate strategy.
4. Give investors decision-useful information they
won’t ignore
Investors use corporate reports to This can lead to difficulties getting How can your company address this?
assess a company’s performance “decision-useful” information into the
and prospects. However, when hands of investors, which means your
preparing their reports, companies company may not be appropriately
use dozens of approaches to decide rewarded if you’re not using the
what information they’ll disclose, information that is robust or
how, how much, where and why. trustworthy enough.

Strengthen processes for applying judgement with respect

to ESG disclosure
Understand how ESG information influences investor decision-making so that your company only
discloses relevant information that will help direct capital flows toward your business.

Identify and disclose financial information related to resilience

Investors want to see that your company is resilient and ready for the future. You can show this by clearly
describing your plans for strategic business development as the world and business operating context
continues to change. Focus on metrics outlining R&D activity, capital allocation, returns and efficiencies.

Provide reasonable assurance on as much information

as possible
You wouldn’t submit your financial filings without a comprehensive audit – so why would you disclose ESG
information without one?

Independent assurance enhances credibility and trust in the information that companies disclose in their
corporate reports. It can increase the confidence that investors have in the information you’re providing
and can help support their decision-making.

Getting started
• Explore and implement the latest guidance on ESG Disclosure for information on disclosure questions,
dilemmas and decisions to help you develop effective and efficient disclosure practice

• Follow established disclosure recommendations, like those from the Task Force on Climate-related
Financial Disclosures (TCFD) and look at examples effective disclosure practice from the TCFD Preparer
Forums

• Understand investor perspectives on the importance of data quality and credibility as well as assurance
5. Identify sustainable investment options
Recent research shows that return on sales, sales growth, return To ensure you’re keeping up,
companies who prioritize and on assets, and return on equity, in your company can look into the
invest in ESG enjoy significantly addition to improved risk-adjusted following.
enhanced performance on a variety shareholder returns.
of key financial metrics, including

Make the most of innovative sustainable finance solutions

Seek targeted finance supporting sustainable ambitions.

Through advancements in sustainable investing, companies can lower their cost of debt and enhance
returns. Olam, Danone and Phillips, for example, have all linked ESG performance to loan prices and
interest rates in collaboration with ING, BNP Paribas and others.

Aside from lowering their cost of capital, companies who consider ESG risks and opportunities also
benefit from better access to financing, customer satisfaction and loyalty and better employee relations.

Align retirement assets with sustainability

The majority of Fortune 1000 companies have not aligned corporate retirement plans with their
sustainability commitments, despite the fact that recent studies show the majority of employees would
like their companies to do so.

66% of millennials and 67% of women expect their 401(k) plans to offer funds aligned with their
company’s sustainability commitments. The rising profile of millennials and female investors is likely to
boost pressure for companies’ improved sustainability performance.

Offering these options to employees alongside traditional pension funds has the potential to increase
participant engagement and savings rates.

Getting started
• Learn how to develop a responsible retirement plan

• Connect with leading financial institutions to explore sustainable finance products and services

• Implement this checklist to improve corporate governance, internal decision-making, external disclosure
and your relationship with capital market players
The checklist
Prepare your organization for change
Keep your board aware of new risks and opportunities
Integrate discussions around sustainability into board meetings and
decision-making processes
Link compensation to sustainability performance

How
• Explore the relationship between sustainability and corporate governance
• Ensure you have appropriate internal controls and board oversight across your company using the
latest guidance
• Engage board members in our governance efforts – designed to help boards reflect the new and
emerging challenges facing businesses today

Optimize internal decision-making

Measure and value impacts and dependencies
Apply enterprise risk management to ESG risks and opportunities
Move toward integrated performance management

How
• Explore, uncover and assess a broader range of your impacts and dependencies using
the Natural Capital Protocol and the Social & Human Capital Protocol
• You can also use the NatCap Checker to check the maturity and robustness of your assessment.
Implement what you learn across your business strategy and decision-making practices
• Apply COSO’s new ESG guidance. It’s is a strong step forward for your company in assessing
and addressing new exposure to emerging and previously unexpected risk

Tell stakeholders what you’re doing in a strategic way

Focus on what really matters and make a plan
Understand what’s out there and what’s expected of you
Recognize what you do well and what can be better

How
• Explore the new ESG Disclosure Handbook to understand which ESG and sustainability metrics are
the most important for your company
• Check out the Reporting Exchange to understand what, where, how, when to report - and to whom
• Engage with Reporting matters to understand where your corporate sustainability reporting is
strong, where it can be better and where there are opportunities to feed the information you report
back into your corporate strategy
Give investors decision-useful information they won’t ignore
Strengthen processes for applying judgement with respect to ESG disclosure
Identify and disclose financial information related to resilience
Provide reasonable assurance on as much information as possible

How
• Explore and implement the latest ESG Disclosure guidance for information on disclosure questions,
dilemmas and decisions to help you develop effective and efficient disclosure practice
• Follow established disclosure recommendations, like those from the Task Force on Climate-related
Financial Disclosures (TCFD) – look at examples effective disclosure practice from the TCFD
Preparer Forums
• Understand investor perspectives on data quality and credibility when you’re choosing how to
disclose and which types of assurance to use

Identify sustainable investment options

Make the most of innovative sustainable finance solutions
Align retirement assets with sustainability

How
• Learn how to develop a responsible retirement plan
• Connect with leading financial institutions to explore sustainable finance products and services
• Implement this checklist to improve corporate governance, internal decision-making, external
disclosure and your relationship with capital market players

Need more guidance?

Get in touch Find out more
Rodney Irwin www.wbcsd.org/Redefining-Value
Managing Director, Redefining Value and Education
redefiningvalue@wbcsd.org

This publication is released in the name of WBCSD. It does not, however, necessarily mean that every member company agrees with every word.

This publication has been prepared for general guidance on matters of interest only and does not constitute professional advice. You should not
act upon the information contained in this publication without obtaining specific professional advice.

No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication
and, to the extent permitted by law, WBCSD, its members, employees and agents do not accept or assume any liability, responsibility or duty of
care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this.
World Business Council
for Sustainable Development
Maison de la Paix
Chemin Eugène-Rigot 2B
CP 2075, 1211 Geneva 1
Switzerland
www.wbcsd.org