Microlearning Module 6 - Business with impact. Environmental, Social and Governance - ESG
Topic outline
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Environmental, Social and Governance - ESG has become a new buzzword, predominantly used in connection to the business world.
E - stands for environmental, S – stands for social and G - stands for governance.
Companies are now asked to report on their environmental impact, their impact on society as well as disclose how they are governed. This so-called non-financial reporting has become equal to annual financial reporting. Investors, governments, as well as the public wants to hold the companies accountable for their activities and therefore ESG reporting is an essential tool to achieve this.
ESG is thus a great opportunity for Social Enterprises to show and disseminate their positive social and/or environmental impact and to build up new connections with large companies, which would like to improve their ESG score and make a more positive impact via collaborations with social enterprises.
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In this unit, you will learn the reasons why we are currently talking about ESG. The underlying reasons include the need to meet international commitments on climate change.
ESG is a reporting framework that serves as a tool to achieve these commitments to climate and sustainability goals. It regulates the financial market to channel the financial resources towards sustainable actions.
In order to unify ESG reporting to make the data comparable across the companies the EU came up with a framework including legislation (CSRD, EU taxonomy) and a set of reporting standards (ESRS).
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The unit explores how Social Enterprises play a pivotal role in addressing four global megatrends: urbanisation, technological advancements, demographic shifts, and resource scarcity.
Through creative solutions to housing or urban food systems, Social Enterprises tackle the complexities of urbanisation to make cities more liveable. Utilising technologies like blockchain and mobile apps, they bridge gaps in healthcare and digital inclusion, supporting even underserved communities.
Social Enterprises address demographic shifts, including ageing populations in one part of the world, growing youth population in another and increasing migration, by targeted programmes like age-friendly housing solutions that empower these groups. Social Enterprises foster integration, independence, and equitable opportunities.
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Activities like burning fuels, discharging chemicals, and changing arable land to industrial space affects air, water, and soil, and may harm biodiversity and ecosystems. Collectively, we call these with environmental impacts.
A structured approach to assess and address them comprehensively as a company is offered by EU taxonomy and ESRS standards. These frameworks require large companies to report on five key areas:
1. Climate change
2. Pollution
3. Water & marine resources
4. Biodiversity
5. Circular economyThe unit addresses the topics separately and presents information on the environmental impacts associated with them.
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The unit explores the social impact within ESG, focusing on how businesses affect people and communities. The “S” in ESG emphasises human well-being, equality, and societal progress through relationships with employees, supply chains, customers, and local communities. It covers four key areas outlined by ESRS: own workforce, workers in the value chain, affected communities, and consumers and end-users.
You will learn how addressing social impact builds business resilience, mitigates risks, contributes to global sustainability goals, and creates value for companies and society.
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This unit highlights governance, the "G" in ESG, as the foundation for ethical, transparent, and responsible organisational management. Governance ensures accountability, and goes hand in hand with environmental and social efforts of the company because without good governance commitments in E and S would be unattainable.
The unit delves into key governance areas: board composition, executive compensation, ethics and compliance, risk management, stakeholder engagement, and transparency. These elements demonstrate how organisations align leadership and decision-making with sustainability goals.
Through practical examples, the unit illustrates how governance practices translate values into action. Ultimately, governance is presented as a strategic tool, not just a compliance measure, empowering organisations to mitigate risks, foster trust, and achieve long-term impact.
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This unit highlights the importance of sustainability reporting frameworks, such as GRI, SDGs, and SASB, in assessing environmental, social, and governance (ESG) performance. These frameworks help organisations measure their impacts and establish meaningful KPIs.
It explores environmental KPIs like emissions, water consumption or waste generated, showing how they align with global sustainability goals. Social KPIs covering areas such as employee well-being, diversity, and human rights are discussed, along with the Social Return on Investment (SROI) framework for valuing social outcomes.
The lecture also examines governance KPIs, including board diversity and ethical practices, demonstrating how strong governance fosters trust and accountability.
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The aim of this unit is to demonstrate how ESG principles are translated into practice in creating sustainable and responsible business operations. This involves a clear direction for goals and training toward embedding ESG values in corporate culture. Furthermore, integrating ESG into decision-making processes is the most crucial step in implementing sustainability into practice. It involves setting up committees, risk assessment processes, and strategic roadmaps.
This unit presents concrete examples of integrating ESG into practice for each topic E, S and G separately.
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