In our last post, we tackled the main challenges of starting the process of including ESG matters in your company’s strategy.
As with many things- the most difficult part is the beginning. Although the Corporate Sustainability Reporting Directive (CSRD) which will enter into force in 2026 will first apply only to large corporations, it is now the right time for SMEs to begin with mapping the topic of ESG Compliance.
As they say “first things first” and the first thing to start with is to choose the best solution for completing ESG tasks in your company.
As we have previously already covered the topic of the link between compliance and ESG it is a logical conclusion that the compliance team should fulfill ESG tasks, because compliance experts are experienced at performing risk assessments of various types of compliance risk. ESG compliance is a new risk factor to consider in the process and should be applied across multiple functional areas of the organization.
Compliance teams can assist with the prioritization of activities to address systematic ESG risks through the innovation of solutions and the development of controls. Compliance teams are also experienced in identifying and mitigating a company‘s risks, including identifying reasonable risks to knowingly accept, and eliminating risks that can lead to adverse financial and reputational outcomes.
If it feels that too much will fall on the shoulders of the compliance team, it is also an option to divide ESG roles across the company. That means there will be no significant increase in the workload of one person or team but on the other hand, it can create a situation where no one is responsible for ESG-related topics.
Our experience has shown that if an ESG-related task is given to an employee, it will be considered as an additional duty or side-task and will be handled when the employee’s main tasks are completed. Here of course it is possible to set clear rules for time management.
In both cases- will the ESG tasks be completed by compliance personnel or divided across the company- the employees have to be trained. Sure, since the time of CRSD entering into force is coming closer, there are a lot of materials, news, blogs, podcasts, etc. available.
But at the end of the day simply reading or listening to a podcast about ESG will not be enough to lead your company through the ESG implementation process.
Another aspect to consider is the workload. If you give the ESG task to the compliance team or divide across the company- either way, someone’s workload will increase and will most likely eventually cause the need to hire a new person. If so, the most convenient could be to hire an ESG specialist from the beginning. That will solve the issue of employee training and increase the workload of existing employees.
That means hiring an ESG Officer, Head of ESG, or Chief Sustainability Officer (CSO) or creating a position similar to these to develop a framework to tackle the most important ESG issues and gaps that your organization is facing and to fulfill your company’s ESG commitments and goals.
The above-mentioned CSO and Head of ESG positions are primarily for large corporations that will become ESG-reporting obliged in 2026. Not all companies are even ready to hire a CSO and as an SME you can easily manage with an ESG Officer position, especially in the beginning when there might not even be enough work for a full-time position.
It is a common practice that companies that are at the beginning of their ESG journey will outsource the ESG service, instead of hiring a new person or having someone within the company complete the ESG tasks. Outsourcing an ESG expert will not only solve the ESG know-how issue but will also allow your company to achieve goals without distraction and enable your employees to stay focused on the core business.
In Gidea Advisory we will provide you with professional ESG services including ESG audits, ESG Due Diligence, and regulatory advice to help your business and support your company on the road to ESG excellence.
Knowing that each company’s ESG journey is different, Gidea Advisory offers tailored solutions for your company. Take a look at our ESG Services and ESG Audit Packages and inquire about tailor-made solutions for your company.