Organisations are under increasing pressure to align with globally accepted ESG codes of practice to create ‘green’ businesses, and to operate sustainably. This will prove to be a huge cultural shift for some, and for those who have taken the initial steps on their journey, there is a transitional period from their existing operations to one which has ESG at the core of the business while balancing health, safety, and commercial commitments.
ESG has a much broader remit than the well-understood climate change and Net Zero initiatives. It should be seen as an opportunity to review how companies manage their stakeholders, build trust with the workforce, engage local communities, and manage the supply chain to identify threats and opportunities across all business activities.
How can we implement an effective ESG strategy?
Businesses need to apply a range of tools and processes to really understand their business’ ESG needs in a structured framework. The lack of perceived knowledge in the field has led to confusion and in some cases, panic, at what appears to be an insurmountable task. However, if an organisation has effectively implemented ISO 14001, they should have done a good chunk of this work as the latest standard introduced requirements around leadership, strategic context, interested party analysis and communication, risks and opportunities and lifecycle perspective.
Green business savvy organisations took this as an opportunity to embed their Environmental Management System (EMS) into their wider business strategy and really drill down into their stakeholder needs and expectations. Although the EMS is primarily a way to manage environmental risk, every business is as unique as the markets they serve including their risk profiles. They understand their customers, what is important to them and what makes them buy their products and services. ESG strategy should be aligned accordingly.
How do ESG expectations differ?
ESG expectations change between positions in the supply chain, market segments, industries, geographies, and of course, over time. For the majority of organisations lower down the supply chain, they are looking up for ESG cues. For those at the top with significant corporate budgets for ESG with in-house expertise, they can be position themselves as leaders in the field and discharge a significant proportion of responsibility down through their supply chain.
Your initial analysis should indicate where your strengths and weaknesses are, and where you need to focus resources. One size does not fit all with ESG. It needs to be right for your business and integrated seamlessly to have the best possible chance for success. It should not hamper your operations, only enhance.
What does this mean for my business?
With the current level of focus and potential costs, organisations need to get this right. When they do, the results are game changing:
- Increased business resilience, agility and growth
- Understanding of environmental and social value from the triple bottom line
- Deliver regulatory compliance
- Reduce operational costs through efficiency savings, supplier review and streamlining
- Diversity among employees, board members and management to promote a wider range of perspectives in decision-making to drive innovation
- Create positive stakeholder and senior leadership engagement and involvement.
- Increase employee productivity by creating a happy, healthy working environment where workers are treated fairly.
This is a chance to re-evaluate business models, internal processes, and decision-making criteria to prepare for future eventualities and growth.
In 1994, John Elkington coined the phrase, ‘people, planet, profit’, an alternative way of accounting which doesn’t just focus on the financial bottom line. Effective ESG recognises that profit cannot come at the expense of our people and the environment, and they are not mutually exclusive.
Want to know more?
Join our live Webinar on 15th June to hear from our expert speakers Jill Butler-Rennie and Andy Smith on all things ESG and your business. Click here to sign up or click here to get in touch with a member of our team today!