A management system is a tool that organisations can utilise to achieve their ESG and SDG ambitions. While it may not be the first thing that comes to mind when developing ESG and SCG strategies and initiatives, its value cannot be ignored. According to DNV’s recent ViewPoint survey, (Are companies committed to sustainability?) more than 80% of respondents fully or partially agree that a management system offers effective support in delivering on ESG and SDG commitments.
What makes a management system such a valuable asset? Many organisations implement a certified management system to satisfy a ticket-to-trade requirement or to improve on a specific area critical to their business objectives and strategy. The real advantage lies in the fact that this same process can be leveraged to support ESG and SDG ambitions in a structured and cohesive manner.
To achieve this dual benefit, companies must first conduct a materiality assessment and analysis to define their overarching ESG and/or SDG ambitions. Once these ambitions are established, specific goals – targeting particular dimensions or issues – can then be effectively managed and improved with the aid of the corresponding management system.
A good example can be illustrated using the environmental standard, ISO 14001. ISO 14001 establishes widely recognised practices and guidelines, making it a key contributor to the environmental pillar of sustainability. When implemented, an environmental management system can help an organisation meet specific commitments to protect the environment and conserve natural resources. It provides a structured approach to improve performance in accordance with the ISO 14001 requirements, in turn enabling organisations to identify and manage risks, set baselines and improvement objectives, monitor performance, and deliver on compliance obligations, customer commitments, and broader business goals.
Moreover, certification by an independent third party not only demonstrates a system’s effectiveness to internal and external stakeholders but also goes beyond serving a traditional ticket-to-trade. Playing a crucial role in supporting ESG or other sustainability-related efforts.
Utilising a management system also holds inherent advantages given the breadth and complexity of challenges and issues organisation navigate in the modern business landscape. In addition to ISO standards on quality, environmental, and safety management, several other standards exist relating to anti-bribery, diversity, equity and inclusion, information security, and business continuity – as well as standards relating to specific industries. Organisations can therefore choose the most suitable standard aligned with their specific ESG ambitions. Additionally, they can integrate multiple management systems for a comprehensive approach, as most standards share a similar structure and all ISO standards follow the Plan-Do-Check-Act (PDCA) cycle.
ISO 14001 is just one standard companies can leverage to help deliver on their ESG commitments. This table shows an overview of some management system standard and within what ESG dimension it primarily contributes.
What ESG dimension can standards support?
How does the PDCA cycle work? In essence, it provides a structured approach to understanding key issues, implementing actions to address them, evaluating the outcomes, and refining strategies based on insights gained – ensuring a continuous cycle for improvement. While the primary a compliant management system is for third-party certification by an organisation like DNV, the same approach can be used to help organisations deliver on ESG and SDG commitments.
Let’s explore how the PDCA cycle can be applied to support companies in delivering on their ESG and SDG commitments, using ISO 14001 as an example.
Plan
This is a key step for a company to understand the environmental risks and opportunities that need to be addressed. It also provides the basis for setting its overall environmental ambitions, including those related to the company’s ESG and/or SDG ambitions.
How management systems support sustainability ambitions?
A key process mandated by ISO 14001 is the identification of environmental aspects with a life cycle perspective, followed by evaluating which of these aspects are significant, based on criteria defined by the organisation. This assessment covers all relevant company activities, including those linked to its products and service, and typically include:
- emissions to air
- releases to water
- releases to land
- use of raw materials and natural resources
- use of energy
- energy emitted (e.g. heat, radiation, vibration (noise), light)
- generation of waste and/or by-products
- use of space
Beyond significant environmental aspects, risks and opportunities can also emerge from shifts in internal and external factors affecting the company. Additionally, they may stem from the needs and expectations of interested parties, including mandatory requirements such as permits, regulations, and other legislative obligations.
This information is therefore a good starting point for a company to identify environmental matters of importance related to its ESG and/or SDGs by using the information to re-assess their relevance using an ESG and/or SDG lens to determine related ambitions.
As part of the planning process, key stakeholders need to establish environmental policies, objectives, and KPIs (Key Performance Indicators). It is essential to ensure these are aligned with identified risks and opportunities, as well as the organisation's established ESG and/or SDG commitment.
Clearly defining these policies, objectives, and KPIs establishes a vital framework that enables individuals within the organisation to align their efforts and develop strategies to achieve the stated goals. Examples of KPIs within environmental management could include reducing overall environmental footprint, improving performance related to greenhouse gas emissions, waste, water effluents, and the use of natural resources – to mention but a few.
Once the above mentioned has been put in place, the organisation can identify required resources to implement their strategies and actions in an efficient manner – this includes identifying any training and skills requirements.
Do
This phase is characterised by the organisation implementing planned actions to address the identified environmental risks and opportunities. These actions should include measures to manage operations in a way that satisfies the organisation's overall ESG and/or SDG ambitions and objectives.
Operational control requirements, a feature of all ISO standards, play a pivotal role in this process. Within environmental management, these controls may include initiatives to minimise waste, reduce greenhouse gas emissions, and enhance the sourcing of sustainable materials. By embedding controls that support ESG and/or SDG goals into their environmental operational processes, organisations integrate these dimensions into their core working culture.
Check
To ensure the success of objectives and KPIs, it is critical that organisations employ several strategies to monitor and measure their overall performance. These strategies include performance reviews, audits, inspections, and management reviews. While this phase is an essential part of the process for organisations seeking independent certification, it also serves as an opportunity to establish essential baselines, track progress, and assess how their environmental management performance supports their ESG and/or SDG ambitions.
Act
To complete the PDCA cycle, organisations must implement corrective actions to address identified issues—referred to in certification terms as nonconformities with ISO 14001 requirements. These actions are designed to prevent recurrences and improve performance. For certified organisations, resolving or closing nonconformities is mandatory to maintain compliance and obtain certification.
The outcomes from this phase often drive the identification of opportunities for continual improvement. Results from the act phase feed back into the plan phase, completing the cycle and contributing to further improve and deliver on any environmental ESG and/or SDG commitments of the company.
