How to Successfully Develop and Implement an ESG Strategy
The development and implementation of a successful environmental, social, and governance (ESG) is now a ‘must-have’ for any organization.
A McKinsey study shows that 70% of employees want to work for a company that has a clear purpose and a well-crafted ESG strategy. As a well-defined purpose can drive employee engagement and improve the creativity and productivity of your workforce. Alongside your workforce, customers also want vendors with a clear ESG strategy - as net zero goals expand to include more than operations alone.
So, how do you successfully develop and implement an ESG strategy? Here are our top tips to get started:
1) Initial assessment of your ecological impact and identify areas for improvement
Organizations need to conduct an initial assessment of the ESG impact on their operations based on ecological factors and build a plan to improve upon them. There are several tools available that help you with the reporting and screening process.
In this pursuit, organizations need to identify the most prominent heads of environmental impact and reduce the same. Some companies might be using a large volume of fossil fuels, whereas others might be using minerals to manufacture their products. Moreover, several organizations might be cutting down trees or leaving a huge carbon footprint due to excessive travel and movement of goods. Therefore, an organization needs to identify the high-impact areas in terms of which it needs to improve its ecological sustainability score.
2) Conduct a holistic assessment of social impact and identify areas for improvement
An organization also needs to take a holistic view of the negative impacts that are inflicted on the society in which it operates and serves due to its current operations. If there are societies that have to be relocated, owing to any construction-related inconveniences or due to changes in their ecosystem, then the organization needs to address them.
3) Assessment of existing governance process and improvement planning
An organization needs to assess its current governance processes, identify areas for improvement, and include them in its ESG plans. This guide by Strandberg Consulting provides questions that can be used to help an organization conduct an assessment of its existing practices in this area, in order to develop a roadmap, work plan or project charter to guide further progress toward sustainability governance embedment.
4) Bottom-up ESG strategic planning
While the above approaches are typically top-down approaches undertaken by a Chief Sustainability Officer (CSO), no strategy can be successful without the understanding and support of all necessary stakeholders. The management may conduct surveys with its workers to develop the ESG strategy by availing a unique view from the frontlines. Often the employees on the ground can suggest innovative and impactful ideas that can be included in the ESG plan.
5) Plan parameters needed to be measured and how
Importantly, the management must decide the parameters that need to be measured to assess the progress of the ESG strategy. The strategy must define the key metrics and methodologies to collect the data and track progress.
Ideas to implement an ESG strategy
The initiative of building an ESG strategy is not enough for an organization to be classified as a sustainable one. This needs to be followed up with implementation. Read on for our top implementation tips.
1) Build a culture that drives ESG initiatives
As the saying goes, culture can eat strategy for breakfast, so it is critical to develop a culture that drives ESG initiatives. To build a proactive culture, regular communication should be maintained with the employees about the ESG initiatives, and how they can contribute in this regard.
2) Incentivize sustainable behavior in your workforce
Incentivizing the right kind of behavior could also drive the success of ESG strategy implementation in any organization. Employees could be given incentives to opt for public transportation or work from a home office to reduce their carbon footprint. The reduction in emissions caused by more conscious transportation choices can be easily measured with the Capture app. Additionally, teams and groups can be rewarded for improving the metrics on the ESG tracker. The winners can be awarded prizes in a company-wide ceremony and their achievements can be communicated across the organization.
3) Reduce business travel
Business travel contributes to a significant build-up of carbon footprint. Companies can embrace a culture of travel avoidance whenever possible, and employees need to be encouraged to use video conferences and other collaborative tools even for customer meetings, whenever possible. To allow your employees to measure their carbon footprint from transportation and measure its reduction through a change in transportation choices, they can use the Capture app. Our unique tracking functionality enables us to automatically predict emissions from daily journeys.
4) Sponsor and invest in ESG-positive initiatives
An organization can sponsor ESG-positive events and invest in projects that have a positive impact on their ESG scores. It can also shift from a fossil-fuel-based energy source to a cleaner energy source by embracing solar and wind power.
5) Educate and encourage employees to be aware of ESG initiatives
Organizations can also motivate their employees to learn more about ESG and build champions for each department, who can evangelize ESG concepts to others. Additionally, they can encourage their employees to volunteer for external events to drive awareness about sustainability initiatives. In this way, employees can become ambassadors of the company and spread a positive message about the strategic importance of the company’s ESG initiative across the world.
It may be said that an organization’s detailed ESG strategy, which is based on its current ESG score, will have a higher chance of success. A comprehensive ESG strategy is the need of the hour, as multiple stakeholders such as investors, regulators, employees, and customers, collectively drive the cause.
At the company-wide policy level, an organization may embrace travel avoidance, green investments, and awareness programs to drive sustainability initiatives. A meticulous approach to implementing the ESG strategy will help an organization transform its culture into a more sustainable one, which, in turn, will trigger a virtuous cycle, which can be continuously improved over time.
Looking for a simple tool to help you mobilise a sustainable workforce? We know there’s a huge amount of work on the plates of those in sustainability - and we want to help make engaging a planet-friendly community a walk in the park. Learn more about Capture Teams and join the conversation via our LinkedIn.