Setting an ESG strategy can build clear policies and actionable guides to help your company create value through responsible, sustainable operations.
ESG strategy, sustainability, CSR reporting – whatever you want to call it, it’s important to your business success. Environmental, Societal and Governance (ESG) concerns are a mainstay of all businesses, and how your company manages and reports on its ESG strategy is increasingly important to customers, employees, investors and your freedom to operate. Global sustainable investment topped $30 trillion in the 2018 Global Sustainable Investing Alliance Review — up 68% since 2014 and tenfold since 2004.
When done well, an ESG strategy will build clear policies and actionable guides to help your company review decisions through the lens of mitigating ESG risks, securing freedom to operate and creating value through responsible, sustainable operations. For example, an improved focus and strategy for waste reduction could identify opportunities to repurpose or sell byproducts, creating new revenue sources.
Whether you are just starting to think about sustainability impacts or have dipped your toe in reporting but not laid out a strategy – here are 5 steps for setting an ESG strategy.
- Assemble a cross-functional internal team of leaders, spearheaded by a senior leader who is ultimately accountable for results. This group will bring multiple perspectives to identify and examine the potential ESG related to your business. Then, examine how those concerns could impact your company’s long-term success and your stakeholders’ decisions related to your company. If your company has an enterprise risk management and/or issues management function, they can provide valuable input to get you started. Begin by identifying every relevant topic, such as water use, GHG, employee health and safety, local community impacts of your operations, and more. Then, prioritize what is most important to your business success, freedom to operate and your stakeholders.
- Gather market intelligence through competitive and market analysis on industry challenges and opportunities related to sustainability. Use this to supplement and gut check the list of priorities created by the cross-functional team. Some things to consider are: emerging issues and regulations affecting the company and its industry, any internal or external analysis of risks and opportunities, and a review of peer businesses’ ESG programs.
- Gather stakeholder feedback on company strengths, areas of concern and improvement opportunities related to the company’s governance and social and environmental stewardship. This research can be conducted in qualitative interviews or quantitative surveys – whichever best fits your relationship with that stakeholder group. Stakeholders could include customers, employees, community members, supply chain partners and vendors, the financial community and non-governmental organizations.
- Analyze data and feedback to establish a strategy framework, including guiding principles of how the company will manage ESG with corresponding targets and metrics to define success. Make sure these are realistic with actionable polices and processes so your employees and operations can to live them or else the efforts will be meaningless.
- Establish a governance committee charged with championing the integration of your ESG strategy into the business. The committee should also be responsible for reviewing progress toward your targets and providing updates to Leadership, the Board and other stakeholders.
An ESG strategy – just like all business strategies – should be reviewed and updated regularly to ensure it remains aligned to stakeholder expectations and the needs of the company. If you’d like to explore ESG strategy or reporting, let us know at email@example.com.