ESG certification is an essential piece of modern business. Top-level certification entities will comprehensively analyze all aspects of your operations to ensure that you adhere to the highest standards of Environmental, Social, and Governance. Such a certification helps you remain competitive and gain the trust of your customers and investors.
But what exactly is an ESG certificate, and how can your ecommerce company earn one? Here’s our guide.
What Is An ESG Certificate For Businesses?
An ESG (Environment, Social, and Governance) certificate verifies your ecommerce company’s sustainability practices. To earn one, your company will undergo an intensive evaluation that analyzes its environmental footprint, social responsibility, and internal governance to ensure that it achieves the highest standards. Once verified, it will receive its ESG certification, which proves to stakeholders that your company is committed to sustainable business practices, aligns with customer values, and practices risk management. Attaining such certification has become an integral part of modern business as customers, investors, and employees expect the companies they support to carry a high standard of ethical business practices.
Benefits Of ESG Certification For Businesses
Obtaining an ESG certification for your ecommerce company is quickly transitioning from a commendable practice to an essential part of business. According to a 2023 study by Accenture, 72% of the 6,000 respondents across North America, Europe, and Asia said that they seek out environmentally friendly products. Carrying such certification will prove your minimal environmental impact to sustainability-minded customers. Furthermore, an Environmental, Social, and Governance analysis will ensure that your company is on track to achieve its sustainability KPIs, guarantee compliance, and mitigate future risks, all of which are crucial considerations for potential investors.
Let’s take a look at some of the biggest benefits of ESG business certification:
- Improved reputation: It proves your company’s commitment to sustainable business practices and social responsibility, building trust among customers, investors, and employees.
- Obtain funding: Certification can attract sustainability-minded investors to support their business. It also shows risk management by addressing ESG factors that allow companies to proactively tackle challenges associated with compliance, supply chain resilience, or marred reputations from greenwashing accusations.
- Increased efficiency: When companies integrate ESG factors, it results in both high standards of sustainability and improved operations, like that associated with resource management. This often leads to reduced costs.
- Become more competitive: Stakeholders want to support businesses that can prove sustainability. Holding an ESG certification does just that, hoisting your ecommerce company above (or at least equal to) the competition.
- Encourage innovation: The ESG analysis required to gain sustainability certification will paint an accurate picture of your current impact as the result of your sustainability initiatives. It will also highlight areas where you might do better. Once you receive ESG certification, the journey isn’t over. You can use it as a leaping-off point to pioneer new sustainability approaches and stay ahead of expectations.
How Does A Company Qualify For ESG?
To gain Environmental, Social, and Governance certification, your company must showcase its environmental sustainability—eco-friendly packaging, low carbon footprint, efficient resource use—social responsibility—fair labor, ethical supply chains—and governance structures—transparent reporting, responsible decision-making. To do so, you must compile the proper documentation and data, engage relevant stakeholders who will assist the process, and prepare your facilities for site visits.
Although the exact requirements needed will depend on the various ESG certification programs that your company chooses to pursue, here are some ways that you can prepare in order to streamline the process and gauge your ESG considerations and current sustainable development status.
- Documentation: The types of documents that you need to prepare include utility bills, diversity programs, any life cycle analyses you may have completed, detailed records on governance structures, carbon accounting, and similar using sustainability management software.
- Data and ESG metrics: This covers any quantitative data that you have concerning your carbon footprint, water usage, employee satisfaction, financial reporting, etc. This is where EcoCart can help. We offer an ecommerce sustainability scorecard that analyzes and quantifies your company’s sustainability.
- Stakeholder engagement: Conduct interviews or surveys with customers and employees about your sustainability strategies and document feedback. You can also develop ESG strategies for internal training and awareness so that your employees can help you in your pursuit of sustainability certification.
- Supplier engagement: A huge portion of your company’s impact likely comes from your supply chains. Because of this, their involvement in this process is imperative. Learn how to conduct a supply chain audit.
- Board and leadership involvement: Make sure that the highest decision-makers are on board with your certification pursuit and provide assistance as you’re developing a sustainability program.
High-level ESG reporting and certification will require a comprehensive analysis of your Environmental, Social, and Governance impacts. The best way to prepare for such an audit is to be as comprehensive as possible in your data collection.
Who handles ESG in a company?
The entity handling your ESG will greatly depend on the size of the company. Often, executive decision-makers need to be key players in sustainability goals, as ESG factors are determined by foundational operation practices. Companies that have the resources to do so often hire an ESG specialist to help them with their ESG and CSR goals. When gaining ESG certification, a third-party entity will get involved to analyze your ESG per certification regulations.
Read more: Sustainability vs CSR vs ESG
Want to know where your business stands? Get your sustainability scorecard with our quiz:
Globally Recognized ESG Certifications For Ecommerce Businesses
The term “ESG certification” covers a wide range of certifications available. Because ESG is so vast, your ecommerce company must take some time to determine which ESG certification best highlights your company’s goals and sustainability strategies. Additionally, you must ensure that the certification you pursue is verified and reputable. If you seek an incomprehensive and unrecognized certification, it could result in greenwashing accusations and a blemished reputation.
Here are some of the most reputable ESG certifications that are beneficial to ecommerce companies.
- B Corp Certification: One of the most comprehensive ESG certifications you can earn, the B Corp Certification analyzes every aspect of your company’s sustainability, including its supply chains. Because it is extensive, gaining this internationally recognized certification proves without a doubt your company’s transparency and adherence to sustainable practices. B Lab offers certification to companies large and small, and they even offer Pending B Corp Certification for companies that are in the process of honing their impact to become certified.
- Rainforest Alliance Certification: This certification focuses on responsible agriculture, including workers rights and resource management. It’s an effective certification for businesses whose products use organic ingredients, such as those in the health and beauty or food sectors. It will primarily analyze your supply chains to ensure sustainable practices from resource extraction to manufacturing.
- Fair Trade Certified: Similar to the Rainforest Alliance Certification, this certification will analyze your supply chains to ensure environmentally and socially responsible resource extraction. This provides certification specifically for your products.
6 Tips To Help You Get ESG Certified
To get ESG certified, you first need to ensure that you demonstrate responsible ESG factors. If your company already has a solid sustainability program in place, then you’re on the right track. However, holistic sustainability isn’t simple; there are many ESG considerations to be made, and if you’ve never had an ESG expert audit your business, it’s likely that there are areas that can be improved.
Here are some ways that you can improve your Environmental, Social, and Governance to help your business get ESG certified.
1. Partner with EcoCart to lower your carbon emissions
EcoCart offers many solutions to help your ecommerce company lower its carbon emissions to reach its carbon goals and be climate positive. With us, you can offer carbon-neutral shipping to your customers, track and measure your carbon emissions with EcoCart’s emissions dashboard, and share your sustainability story to your customers by sharing our resources. We’ve helped many ecommerce companies just like yours achieve and even exceed their carbon emissions goals, helping them get one step closer to gaining ESG certification.
2. Develop procedures for data collection and analysis
The key to achieving sustainability goals is developing measurable targets and KPIs. As you create your sustainability program to earn ESG certifications, make sure that you have clear procedures in place to continuously gather data so that you always know where you stand and if your strategies need to be adjusted.
Learn how to conduct a sustainability audit to get started.
3. Implement regular sustainability reporting
In the context of obtaining ESG certification, sustainability reporting is a helpful step. Sustainability reporting, or ESG reporting, involves documenting and sharing your company’s environmental, social, and governance initiatives. As you examine your current impact, use existing ESG frameworks to guide your analysis. These include the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), and the Carbon Disclosure Project (CDP). Aligning your sustainability report with your chosen frameworks ensures that your reporting meets international standards and provides a clear, structured way to present your sustainability efforts.
Regular, consistent sustainability reporting is crucial, as it tracks your progress and identifies areas for improvement. Consider third-party verification of your reports to add credibility and substantiate your claims. By transparently showcasing your progress in areas like carbon emissions, resource management, and social responsibility, you provide tangible evidence of your company’s dedication to sustainability. This step is often viewed favorably by ESG certification entities, as it shows a commitment to accuracy and transparency in your sustainability journey.
Read our guide to sustainability reporting to get started.
4. Start with small changes that make a big impact
To enhance your chances of obtaining ESG certification, focus on initiating small but impactful changes in your business operations. These changes, while seemingly minor, can significantly reduce your environmental and social impact, aligning your business more closely with ESG standards.
- Adopt Eco-Friendly Packaging: Transitioning to sustainable packaging materials, such as recycled or biodegradable options, minimizes waste and environmental impact. This shift not only reduces your carbon footprint but also showcases your dedication to responsible resource usage, an important factor in ESG evaluation.
- Promote Eco-Conscious Shipping Options: Where possible, implement sustainable shipping practices. Encourage your customers to choose slower delivery, as air freight carries a considerably higher carbon footprint than ground or sea transport. Ground or sea transport, being more carbon-efficient, aligns better with ESG standards for environmental stewardship.
- Implement a Recycling Program: Implement a recycling program for packaging materials and returned products. Encourage customers to recycle packaging by providing instructions or establish a resale program for returned items.
- Energy Audit and Reduction: Conduct an energy audit of your digital infrastructure. Optimize your website and servers for energy efficiency, potentially using green hosting solutions. This demonstrates a commitment to reducing digital carbon footprints, a unique aspect for ecommerce businesses.
- Water Conservation Measures: For businesses involved in manufacturing or with physical products, ensure water conservation practices are in place at the production level. Conduct a water audit and partner with suppliers who use water-efficient processes.
- Employee Training and Engagement: Educate your employees about sustainability practices and engage them in your ESG goals. This could involve workshops, sustainability challenges, or incentive programs. Employee involvement is often a key aspect of social sustainability in ESG criteria.
- Sustainable Supply Chain Management: Assess the environmental impact of your supply chain with a supply chain audit. Opt for suppliers with verified sustainable practices, and consider the carbon footprint of shipping and logistics. Offer products that are sustainably sourced and produced.
- Community Engagement and Social Responsibility: Actively participate in community initiatives or charity programs. Demonstrating a commitment to social responsibility and community development can be a significant aspect of the social criteria in ESG certification.
- Transparent and Ethical Business Practices: Ensure that your business operations are conducted ethically and transparently. This includes fair dealing, anti-corruption measures, and transparent financial reporting.
These actionable steps contribute to a stronger ESG profile by directly addressing key environmental and social aspects of the certification criteria. By implementing these changes, you not only make tangible progress in sustainability but also provide clear evidence of these efforts to ESG certification bodies, improving your chances of obtaining the certification.
5. Seek professional guidance
If you have the resources, hiring a sustainability consultant can immensely help your company toward its ESG goals. ESG experts can help your business effectively evaluate your environmental impact and develop responsible business practices. Sustainability strategies are not intuitive, and it’s easy to let certain factors fall through the cracks. You can either employ a consultant full-time to lead your sustainability program or hire a temporary contractor who will work with you to develop a program that you will then implement yourself.
6. Develop a continuous improvement plan
Even after you earn ESG certification, your sustainability journey isn’t done. There will always be areas for voluntary improvement, and minimizing your impact further will also ensure that you’ll adhere to more stringent future regulations. Once your targets are reached, develop new plans to achieve bigger targets and reduce your footprint even further.
Earning an ESG business certification will ensure that your sustainable ecommerce company remains competitive, assures compliance, and is attractive to potential investors. Such certification is essential in modern business if you want to stay ahead of the curve. Certification from reputable entities is not easy, and you’ll need to make sure that your company is transparently and thoroughly committed to ESG goals.
EcoCart offers plenty of resources to help you reach top sustainability standards, earn ESG certification, and hit your carbon emissions goals. Interested in learning more? Reach out to our team for a demo today.