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What does ESG Stand For?

What does ESG Stand For?

 

The “E” in ESG stands for Environmental

 

In an ESG strategy, the Environmental component focuses on how an organisation impacts and manages its impact on the natural environment.

 

Typical areas that it covers include:

• Greenhouse Gas emissions (GHGs) and climate impact (eg - CO₂ reduction targets, energy efficiency)
• Energy use and renewable energy adoption
• Waste management and circular economy initiatives
• Water usage and conservation
• Pollution control (air, water, soil)
• Sustainable sourcing of materials
• Biodiversity and land use impacts

Essentially, it focuses on how responsibly an organisation uses natural resources and manages its environmental impact.

 

The “S” in ESG stands for Social

 

In an ESG strategy, the Social component focuses on how an organisation manages its relationships with people, employees, customers, suppliers, and the wider community.

 

Typical areas that it covers include:

• People & Workforce – employee wellbeing, health and safety, diversity, equity and inclusion, fair labour practices, training, development and talent retention
• Supply Chain & Human Rights – ethical sourcing, modern slavery prevention, fair wages and safe working conditions across the supply chain
• Customer & Community Impact – product safety, responsible marketing, community engagement and contribution, social impact initiatives
• Stakeholder Relationships – transparency and trust with employees, partners and communities

Social focuses on how an organisation supports and values its people, fosters a positive workplace culture, and contributes responsibly to the wider community.

 

The “G” in ESG stands for Governance

 

In an ESG strategy, Governance covers how a company is led, managed, and held accountable. It’s about the systems, rules, and practices that ensure the organisation operates ethically, responsibly, and transparently.

 

Typical areas that it covers include:

• Board structure and independence
• Executive accountability and compensation
• Risk management and internal controls
• Ethical conduct and anti-corruption measures
• Compliance with laws and regulations
• Transparency in reporting and decision-making
• Shareholder rights and stakeholder engagement

Governance is about ensuring the organisation is led and managed responsibly, with clear accountability, ethical decision making, and strong oversight.

 

 

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ESG Starter Strategy

ESG Starter Strategy

 

A foundation document to begin our Environmental, Social & Governance (ESG) journey

 

1. Executive Summary

 

This ESG Starter Strategy outlines a practical and phased approach for your organisation to begin integrating Environmental, Social, and Governance considerations into our operations. ESG is becoming increasingly relevant for NZ organisations due to evolving regulatory expectations, particularly around climate disclosures, modern slavery, and governance transparency, alongside stakeholder expectations for responsible business practices.

 

This document provides a simple roadmap built around what matters most for SMEs - compliance, operational efficiency, reputation, and future-proofing the business.

 

2. Why ESG Matters for Our Organisation

 

External Drivers

• Increasing NZ regulatory momentum: NZ’s climate-related disclosure framework is expanding, even if currently mandatory only for large organisations. SMEs are encouraged to voluntarily measure emissions and improve sustainability practices.
• Customer & supply chain expectations: Larger customers increasingly require sustainability data from SME suppliers.
• Cost savings & efficiency: Energy efficiency, waste reduction, and responsible resource use often directly reduce operating costs.

Internal Benefits

• Strengthened brand and trust
• Improved recruitment & retention
• Better risk management and long-term resilience

 

3. ESG Material Topics for NZ SMEs

 

Based on NZ SME sustainability guidance and local regulatory trends, we propose the following priority topics:

 

Environmental (E)

1. Emissions & Energy Use

2. Waste Reduction & Recycling

3. Resource Efficiency (water, materials)

 

Social (S)

1. Health, Safety & Wellbeing

2. Workforce development and skills

3. Diversity, Equity & Inclusion (DEI)

4. Community Engagement & Māori partnership considerations

 

Governance (G)

1. Policies & Ethical Standards

2. Supply Chain Transparency

3. Risk Management (including climate risk)

4. Board/Leadership oversight

 

4. Recommended Frameworks & Tools for SMEs

 

• Starter for Ten - NZ SME Sustainability Topics (10-topic framework)
• EECA Energy Efficiency Support & Guides (for emissions & energy reductions)
• SBC’s “Making ESG Part of Your Risk Management” (guidance on embedding ESG into ERM)
• Simple carbon calculators (eg - Toitū or EECA-supported tools)

 

5. Governance & Accountability Structure

 

• ESG Sponsor: Senior leader responsible for oversight
• Working Group: Cross-functional team (ops, HR, finance)
• Reporting Frequency: Quarterly internal updates; annual public summary
• Integration: ESG risks incorporated into organisational risk management systems.

 

6. Next Steps & Immediate Actions

 

1. Confirm ESG sponsor and working group

2. Begin emissions measurement and waste audit

3. Draft simple ESG policies (Code of Conduct, Supplier Standards)

4. Start a small-scale, positive initiative within 60 days (eg - recycling upgrade, wellbeing workshop, energy efficiency upgrade)

 

 

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ESG Starter Pack – Environment (E)

ESG Starter Pack – Environment (E)

 

1. Measure your GHG footprint

 

Measure your GHG footprint using an SME friendly calculator.

 

NZ SMEs are encouraged to voluntarily begin emissions measurement as a first step.

 

2. Identify your top 2-3 sources of emissions or energy use

 

Energy use, transport and waste are typical SME hotspots.

See Appendix A.

 

3. Start implementing easy energy-efficiency improvements

 

eg – LED lighting, equipment maintenance or EECA-supported efficiency actions.

 

Lighting upgrades – convert to LED and smart controls (occupancy/daylight sensors) in warehouses, offices and yards.

 

Align with NZ Green Building Council practices via EECA sector guidance.

 

4. Conduct a simple waste audit

 

Understanding what you throw away helps identify reduction and recycling opportunities.

See Appendix B.

 

5. Introduce recycling or waste-reduction initiatives

 

Small operational improvements can reduce landfill costs and environmental impact.

 

6. Explore opportunities for circular economy practices

 

SMEs can reduce costs and resource use by reusing materials or improving process efficiency.

See Appendix C.

 

 

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ESG Starter Pack – Social (S)

ESG Starter Pack – Social (S)

 

1. Strengthen Health, Safety & Wellbeing Practices

 

This is a core New Zealand requirement and supports a positive workplace culture.

See Appendix A.

 

2. Run a wellbeing check-in or initiative for Your Team

 

Supports employee morale and compliance with the Health and Safety at Work Act.

See Appendix B.

 

3. Start developing Diversity, Equity & Inclusion (DEI) principles

 

DEI is a key topic in NZ SME sustainability guidance.

See Appendix C.

 

4. Review skills and workforce development needs

 

Upskilling is one of the recommended NZ SME sustainability metrics.

 

5. Engage with local community initiatives

 

Even simple steps like sourcing locally can contribute positively to community wellbeing.

 

6. Map potential social risks in your supply chain

 

Particularly around modern slavery and labour practices.

See Appendix D.

 

 

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ESG Starter Pack – Governance (G)

ESG Starter Pack – Governance (G)

 

1. Establish Or Refresh a Basic Code Of Conduct

 

Governance expectations include ethical standards and transparency.

See Appendix A.

 

2. Create A Simple Supplier Policy

 

Helps clarify expectations around ethics, environment, and social issues.

See Appendix B.

 

3. Assign An Internal ESG Sponsor or Working Group

 

Governance frameworks emphasise the importance of leadership connection and oversight.

 

4. Include ESG Considerations in Your Organisational Risk Register

 

Embedding ESG into Risk Management is identified as best practice for SMEs.

See Appendix C.

 

5. Begin Documenting ESG-Related Decisions and Processes

 

Supports transparency and future reporting expectations.

 

6. Familiarise Yourself with NZ’s Evolving ESG Regulatory Environment

 

Climate disclosures, modern slavery proposals, and governance reforms are shifting.

See Appendix D.

 

 

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What EECA Is

What EECA Is

 

EECA is a Crown agency whose purpose is to mobilise New Zealanders to be world leaders in clean and clever energy use.

 

It works to improve the energy efficiency of New Zealand homes and businesses, supports renewable energy uptake, and provides information, tools, and funding to help people and organisations reduce energy waste and emissions.

 

EECA’s Work includes:

 

1. Funding & Grants

 

EECA offers a wide range of co-funding programmes to help businesses and households decarbonise. This includes:

 

• Warmer Kiwi Homes programme – grants covering 50–90% of insulation and heating for eligible homes
• Low Emissions Heavy Vehicle Fund – grants covering up to 25% of the purchase or conversion of zero/low-emissions heavy vehicles
• Programmes for industrial decarbonisation, energy audits, feasibility studies, and technology demonstration projects

 

2. Business Support

 

EECA provides:

 

• Energy management planning (co-funding up to 40% to help businesses reduce energy use)
• Sector-specific pathways for manufacturing, freight, commercial buildings, etc. to reduce emissions and improve efficiency
• Tools to help businesses measure emissions, similar to the Climate Action Toolbox approach of measuring before reducing

 

3. Transport Decarbonisation

 

EECA supports NZ’s transition to cleaner transport through:

 

• Funding for electric and hydrogen vehicles, charging, vessels, and off-road machinery via historic Low Emission Transport Fund (LETF) programmes
• Ongoing Heavy Vehicle Fund for zero-emission trucks and conversions

 

4. Home Energy Efficiency

 

EECA helps households’ lower energy bills and improve comfort via:

 

• Warmer Kiwi Homes programme (insulation + heat pumps) reaching thousands of NZ homes
• Guidance on heating, insulation, solar, and efficient appliances

 

www.eeca.govt.nz

 

 

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