Many companies are now incorporating an Environmental, Social, and Governance (ESG) strategy into their business decisions. This shift is being driven by a growing awareness of the need to address social and environmental issues, as well as the belief that ESG factors can affect a company’s financial performance. While the integration of ESG into business decision-making is still in its early stages, it is becoming increasingly important for companies to have an ESG strategy.
Is ESG the same as CSR?
No. CSR is part of ESG activities. Historically, CSR activities have sometimes been a way of ‘balancing the scales’, for example an events company that doesn’t recycle its events material may raise money to fund a local children’s charity. Or a construction company might initiate tree-planting ceremonies. Sometimes these are visual demonstrations that are part of a bigger initiative, sometimes it’s simply just a case of planting one tree for a photo opp.
Why Develop an ESG Strategy?
There are a number of reasons why your company should develop an Environmental, Social, and Governance (ESG) strategy. First and foremost, it’s the right thing to do. Incorporating ESG factors into decision-making helps to ensure that a company is taking into account the social and environmental impacts of its actions.
An ESG approach can also help a company to manage risks, unlock opportunities, reduce costs, drive innovation, attract and retain talent, and improve communication with stakeholders. A well-designed ESG strategy can also build trust and enhance reputation – this is why communicating your ESG strategy, policies, and successes is a vital part of your marketing and social media strategy.
As a business leader, you know that it’s important to have a strong corporate social responsibility (CSR) strategy. But what you may not know is that an increasing number of consumers, employees, and investors are looking for companies that also have a robust ESG program. In fact, a recent study found that 85% of global consumers consider a company’s environmental and social practices when deciding whether or not to make a purchase
Moreover, millennials – who will make up 75% of the workforce by 2025—are even more likely to seek out companies with strong ESG programs. A study found that 87% of millennials would purchase a product because the company advocated for an issue they care about. And 64% would switch from one brand to another—even if it was more expensive—if the new brand supported a cause they believed in.
Finally, investors are increasingly interested in companies’ ESG performance. A 2017 survey by BlackRock found that almost half of global investors consider environmental, social, or governance factors when making investment decisions. This represents a significant increase from previous years and indicates that investors are becoming more aware of the risks and opportunities associated with ESG factors. By integrating these considerations into decision-making, companies can make themselves more attractive to potential investors
What Should Your ESG Strategy Include?
While there is no one-size-fits-all answer to this question, there are some key elements that all successful strategies should include:
- A clear description of the company’s commitment to sustainable development
- Specific goals and objectives
- A plan for how these will be achieved
- Measures for tracking progress
- Timelines for implementation
- An identification of who is responsible for each action
- Procedures for monitoring implementation; and
- Methods for communicating progress to stakeholders
So how can you develop an effective ESG strategy? Here are a few tips:
1. Assess your company’s current state
The first step is to take stock of where your company currently stands in terms of its environmental and social impact. This means conducting an internal audit to identify any areas where your company might be falling short. Once you’ve done that, you can begin developing goals and objectives for your ESG program.
2. Set ambitious yet achievable goals
Your ESG goals should be ambitious yet achievable. They should also be specific, measurable, relevant, and time-bound (SMART). For example, setting a goal to reduce your company’s carbon emissions by 20% over the next five years is much more effective than setting a goal to “be more environmentally friendly”.
3. Develop partnerships and collaborations
You don’t have to go it alone when it comes to developing your ESG strategy—this is why organisations such as Bright Company exist. There are also lots of ways to get help across the internet. The World Wildlife Fund offers climate and energy assessment tools that can help businesses reduce their carbon footprint. Meanwhile, the Natural Resources Defense Council in the United States provides companies with resources on how to operate more sustainably.
4. Communicate openly and transparently about your efforts
Once you’ve developed your ESG strategy and begun implementing it within your business, make sure you communicate openly and transparently about your efforts with employees, investors, customers, and other stakeholders. This will not only help build trust but also give you valuable feedback on how you can improve your program going forward.
Clearly, effective ESG goals and clear communication of those goals are becoming increasingly important to organisations. Those that don’t have a strategy in place are at risk of being left behind or, worse, having others investigate their ESG policies and activities for them. Sometimes with detrimental effects on share price and business results.
By taking stock of where your company currently stands, setting ambitious yet achievable goals, partnering with like-minded organisations, and communicating openly about your efforts, you can develop an ESG strategy that will allow your business to thrive for years to come.
While developing an ESG strategy may seem like a daunting task at first glance, it is important to invest time and resource into your strategy. By taking the time to incorporate social and environmental considerations into decision-making at every level of the company, you can position your business for long-term success.
If you are looking to develop your strategy, communicate your ESG programme, help solve a marketing challenge, need a creative injection, or have a marketing, communications, social media, digital, or events brief, then let us know.