How to Get Started With ESG
Operating sustainably is key to business survival in today’s world because customers and investors are increasingly gravitating toward businesses with sustainable practices.
15th September 2022
Operating sustainably is key to business survival in today’s world because customers and investors are increasingly gravitating toward businesses with sustainable practices. The key to operating sustainably is an effective ESG strategy.
But what exactly is ESG, and how do you get started with it for your business? Here we will answer these questions and give you all the info you need. Let’s get started!
What is ESG?
ESG is an acronym for environmental, social, and governance, which are the three criteria that make up an organisation’s sustainability strategy.
Environmental – Environmental refers to a company’s carbon footprint. It looks at a company’s effort to reduce direct and indirect greenhouse gas emissions and pollution.
Social – Social refers to a company’s treatment of its employees, customers, and other stakeholders. The social criteria looks at HR metrics like fair wages, working conditions, etc. It also looks at an organisation’s impact on its host community via its social responsibility programs and its impact on supply chain partners (especially those in developing economies with relatively lax environmental and labour standards).
Governance – This refers to a company’s board structure (how it is led and managed) and executive remuneration. It looks at the type of internal controls in place to promote transparency and accountability, how leadership views their shareholders, etc.
Why Should You Care About ESG?
Implementing ESG is not just about being a friendly company. ESG benefit a company in many ways, which include:
Better management of risk – A business that considers shifts in environmental and social systems can identify potential risks early on, allowing them to take steps to avoid or mitigate them.
Competitive advantage – With calls for more responsible business practices, more and more customers and investors are identifying with businesses with sound ESG strategies.
Better employee retention and engagement – When a business has strong social policies that result in fair treatment of employees, they are more likely to commit to business objectives and less likely to jump ship.
How to Implement an ESG Strategy
Do you want to implement ESG strategies and enjoy the benefits of being reputable for having sustainable business practices? Here are a few tips for getting started with ESG.
· Educate the team about ESG
· Assess the current state of your business
· Set ESG goals
· Put your plan in motion
· Track your progress
· Communicate your sustainability efforts
1. Educate Your Stakeholders about ESG
Strategy implementation is always easier if everyone concerned understands what the organisation is trying to achieve. So, the first step in implementing ESG is to educate your stakeholders about ESG.
The ESG education should help your team, and other stakeholders understand what ESG means and why it is important. They should see a direct link between implementing ESG strategies and achieving core organisational goals. With this, you’ll get everyone to commit to the organisation’s ESG efforts.
2. Assess the Current State of Your Business
Perform an honest assessment of where your business is with regard to ESG. A structured assessment will help you identify what you are already doing and where you can make improvements.
For example, with an honest assessment, you will determine your most significant environmental impacts and see what operational changes you can make to improve things. An assessment will also reveal social issues that you may need to address or procedures that you could amend to ensure better governance.
It is easier to implement ESG initiatives if you do not have to build everything from scratch. So, the assessment of your current state of things should also look for opportunities that’ll aid your ESG efforts. For example, you should look at the skillset, processes, and programs you already have in place that can help your efforts.
3. Set ESG Goals and Create a Plan
After identifying the specific areas to improve, the next thing is to set specific goals for your ESG strategy. Having goals gives you something to aim for. You should clearly state what you want to achieve in the short term and in the long term.
You may liaise with your key stakeholders for input in this regard. Environmental goals can include decreasing fossil fuel usage or minimising waste. Social goals can include improving employee satisfaction, while governance goals can include increasing transparency.
When setting ESG goals, ensure that they are SMART:
Specific – The goal should be clear and well-defined
Measurable – You should be able to measure progress towards the achievement of the goal
Achievable – The goal should not be impossible to achieve
Realistic – The goal should be within reach and relevant to your business’ purpose
Time-bound – You should have a timeline for the achievement of the goal
4. Put Your Plan in Motion
After setting your goals and creating a plan for achieving them, the next thing is to execute your plan. This step involves making the operational and procedural changes that you’ve mapped out as essential to achieving your sustainability goals and objectives.
5. Track Your Progress
One of the most important quotes in business is, “if you can’t measure it, you can’t improve it.” So, ensure that you track and measure progress on your sustainability journey.
Measure key performance indicators (KPIs) at all levels of the organisation from time to time to ensure that you are on track, and make necessary adjustments if you notice any deviations.
6. Communicate Your Sustainability Efforts
Communicating your sustainability efforts is also a vital step as it helps build trust. At the very beginning of your ESG efforts, you secured the commitment of your stakeholders, so you should let them know what you’re doing.
Like every other business communication, ESG progress reporting should be clear and concise. You should highlight your progress, clearly stating what you’ve done, what you are doing, and what you still plan to do towards achieving particular sustainability goals.
With more and more customers and investors turning to businesses with a reputation for sustainable practices, implementing ESG strategies is crucial to business survival in the long run.
The steps for getting started with ESG in your business are: educate your stakeholders on ESG, assess the current position of your business on ESG, set ESG goals and create a plan, put your plan in motion, track your progress, and communicate your sustainability progress.
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