Regardless of which industry you work in, the type of products or services you provide, or the size of your business, ESG (environmental, social and governance) issues should be a top consideration for your brand. According to a recent McKinsey survey of c-suite executives and investment professionals, 57% of business leaders agree that ESG programs create value in both the short and long term. Adopting, maintaining and evolving your business’s approaches to ESG are key investments in building trust with your partners and purchasers and keeping your brand at the front of the pack in terms of leadership and innovation. Before we dive into detail about the significance of ESG indicators for your business, let’s first clearly define what each of these components represent and include:
- Environmental: This factor measures your company’s energy and resource utilization, the waste it discharges, and the consequences and impacts it has on the environment. Some specific areas of consideration include electricity usage, fossil fuel usage, water usage and pollution, air pollution, carbon emissions, and physical and chemical waste.
- Social: This factor addresses the relationships your company maintains with communities, institutions and individuals, as well as the reputation your business has with the public. The social factor includes labor relations and diversity, equity and inclusion.
- Governance: This factor represents the processes and approaches your company maintains in order to govern itself. The Governance piece of ESG includes the steps your business goes through to make decisions, its approach to complying with the law, and its procedures guaranteeing that the needs of stakeholders are met.
When evaluating ESG factors, it’s important to remember that monitoring and addressing the approaches and impacts of your company is key to identifying actionable opportunities for increasing efficiency and limiting negative consequences. By pursuing accurate measures of your brand’s ESG factors, you equip your business to take the proactive steps that will ensure its current and future growth.
How can investing in ESG measures help my business?
At GS&F, we understand that the bottom line when it comes to making decisions for your business is often just that—the bottom line. Recent research has consistently affirmed the tangible value of improving approaches to environmental and social impacts through tactful governance. In the 2019 US Business Roundtable on the purpose of a corporation, it was definitively stated that businesses have an obligation and opportunity to be committed to their customers, employees, suppliers, communities and shareholders through ESG practices. You can feel confident about investing in ESG practices knowing that effective ESG measures have been linked to driving cash flow in five key ways: (1) facilitating top-line growth, (2) reducing costs, (3) minimizing regulatory and legal interventions, (4) increasing employee productivity, and (5) optimizing investment and capital expenditures. By pursuing more proactive approaches and processes your business secures stakeholder support; improves efficiency; lowers waste and costs; and gains a strong, competitive positioning in your category.
How can I create an effective ESG approach for my business?
Because ESG issues are often so large and complex, it can feel overwhelming to start the process of developing a plan for positive change. To help guide you, these are our recommended steps for identifying and pursuing key ESG opportunities for your brand:
- Conduct a materiality assessment: Identity what types of ESG issues are impacting your industry, market and key stakeholders. How is the changing environment affecting your category and vice versa? How does your industry currently relate to society, the communities you work in, your business partners, and the individuals you serve?
- Perform an internal audit: Before deciding on which key opportunities to pursue, you must first get a gauge on where your company is on ESG practices right now. Begin by assessing your existing programs, policies and measurement approaches. It is also valuable to talk to current ESG initiative leaders at your company to hear their feedback on what projects may already be in the works. With all this information in mind, ask these three questions: What are the most obvious areas for improvement? What are the biggest opportunities that have not previously been explored? What is the most high-potential, low-hanging fruit we could pursue right now with the resources available to us?
- Define key, actionable ESG opportunities and establish clear objectives: Using the list of ESG opportunities from your materiality assessment in combination with the findings of your internal audit, narrow the list to the projects with the greatest potential for creating tangible value for your company. It’s important that the projects you prioritize are actionable and logistically feasible for the amount of time and investment your business is able to allot to them. Once you have aligned on the opportunities you plan to pursue define clear, measurable objectives to guide your action plan. Pressure check these goals and objectives with internal stakeholders to ensure you have total company alignment before starting work.
- Identify the gaps and develop an action plan: Already armed with your internal audit, it may be easy to map out the gaps between your company’s current state and its future state after instituting these ESG improvements. After noting these gaps, create an action plan that outlines what steps need to be taken to get your business from point A to point B. Be sure to plan progress check-ins along the way to ensure accountability.
- Follow the plan and report the results: Once you make the plan, it’s time to work the plan. Having a team of committed individuals across key departments allows for a straightforward approach of “dividing and conquering,” and consistent status updates will help you stay on track. As you hit checkpoints and, eventually, accomplish all the objectives for the project, publish the progress and results for your stakeholders, business partners and customers to see! Consistently highlighting the work your company is doing to complement your business objectives and goals demonstrates your accountability, responsibility and effectiveness. Even after the project is completed, it’s important to consistently revisit it so you can make continued improvements that can be highlighted in public reports for easy wins with your key stakeholders.
How can GS&F help my business define and pursue valuable ESG opportunities?
GS&F is and has been a trusted partner of many major brands in their pursuit of more effective ESG practices. As a full-service marketing agency, we are proud to offer multiple teams of researchers and strategists who specialize in identifying key opportunities for your business within its competitive and cultural context and outlining the clear, actionable steps that will take your business to the next level. If you are ready to push your business forward by enhancing your approach to ESG, we are the specialists and partners prepared to guide you toward that goal. We’d love to chat, so feel free to get in touch with us here.