“Why is QSEH Star relevant to ESG?” To answer that question, we must examine several different aspects. In this blog, we’ll dive into the role of the Corporate Sustainability Reporting Directive (CSRD), provide an explanation of ESG criteria, and explore how our Low-Code solution, QSEH Star adds value.
The CSRD is an EU directive and a direct result of the European Green Deal. The EU’s objective is to achieve net-zero greenhouse gas emissions by 2050. The CSRD comes into effect for the largest publicly listed organisations at the start of the 2024 fiscal year. Listed SMEs will follow in 2026, and ultimately, this directive will apply to all other organisations.
Due to its comprehensive and specific requirements, complying with the CSRD requires a significant effort for most businesses. According to this directive, businesses must:
- Publish the formulation of their sustainability strategy.
- Report associated objectives.
- Indicate the policies and measures through which they intend to achieve those goals.
- Monitor and report their progress.
This kind of high quality reporting of non-financial information is becoming just as important as traditional financial reporting.. These reporting standards are often aligned with certain ESG aspects. But what is ESG?
ESG criteria explained
The ESG criteria (Environmental, Social, and Governance) were conceived in 2006 as a non-financial investment index that enables investors to engage in responsible investing. Since their inception, the ESG criteria have made their way into countless businesses, especially as they assist organisations in achieving the United Nations Sustainable Development Goals (SDGs). The SDGs are comprised of seventeen globally established goals that address environmental issues, but also socioeconomic issues such as poverty, education, and equality. The goals are set to be achieved by 2030, and by aligning business operations with the ESG criteria, a company can make a positive contribution to the SDGs as well.
ESG’s constitute the three primary areas of criteria which are used to measure how sustainable and responsible a business is.
Environmental: Environmental criteria measure a company’s sustainability efforts. This includes aspects such as the use of renewable energy to power operations, the utilisation of sustainable materials in the construction and production, and the reduction of carbon dioxide emissions caused by logistics.
Social: Social criteria examine data related to diversity and inclusivity and how the organisation fulfills social responsibilities. These social criteria measure inclusion in the workforce, the fair treatment of customers, and the company’s social impact, including donations to charities and local community projects.
Governance: Governance criteria analyse how the company is structured and governed. This involves examining internal voting rights, the structure of the board of directors, the diversity of stakeholders, and how rights and responsibilities are delegated. An important aspect of ESG data is its sector specificity. For example, the construction sector relies on data such as leave for health and safety, while technology companies are assessed on aspects like data security.
QSEH Star and ESG: its added value
Let’s return to the question, “Why is QSEH Star relevant to ESG?”
Even though the interpretation differs per industry, the concept remains the same. The obligation to comply with the CSRD requires your organisation to collect data on Environment, Social, and Governance criteria and then use it in reporting.
To accomplish this, you can establish policies that need to be monitored and conduct audits and inspections that can be effectively documented and tracked in QSEH Star. Deviations from policies and resulting agreements can be recorded in the form of incidents or deviations, which can then be processed. This may lead to corrective actions, preventive actions, and increased monitoring for the effectiveness of adjustments. These are all integral parts of QSEH Star. When formulating ESG goals, Key Performance Indicators (KPIs) are also involved. The intelligence module of QSEH Star provides the capability to display insights based on the registered data in alignment with KPIs.
Research has shown that the primary challenge for CSRD and therefore, ESG reporting lies in collecting data from the right sources. QSEH Star helps to reduce this challenge. Due to the flexibility and adaptability of QSEH Star, it is a suitable solution for organisations in any industry: there is no one-size-fits-all approach. Therefore, QSEH Star is relevant to the ESG index and CSRD compliance.
If you want to learn more about the features of our Low-Code solution, QSEH Star and its added value for your organisation, download our whitepaper for more insights.