The environmental, social, and governance (ESG) framework is important for investors seeking a sound portfolio. ESG assesses how a business addresses waste management, energy use, employee welfare, societal impact, and ethical practices.
If you view ESG as a series of boxes to check, you are doing it wrong. A successful ESG strategy requires building a corporate culture of sustainability, transparent governance, social good, and ethical behavior. Therefore, properly implementing the ESG framework will make your business sustainable and profitable.
Here are tips to help improve your corporate ESG strategy.
Set Goals And Targets
Setting clear goals and targets for all ESG areas effectively improves your corporate ESG strategy. Sizeable goals are a good idea, but you risk straining your team and under-delivering, damaging your company’s reputation. Therefore, to be safe, set SMART goals and targets.
As you design your goals and targets, assign your employees responsibilities based on their strengths and experience in each phase. Setting a timeline will determine deadlines, but you should consider that some tasks may take longer to complete.
Measure And Report Your Progress
A company aiming at improving its corporate ESG strategy should measure and report its progress. These processes highlight gaps, track progress, and communicate performance to stakeholders. Transparency on wins and losses will build trust and credibility with your stakeholders, as most want sounding targets and not impressive figures. A company can enhance transparency through data visualization, traceability and visibility of the supply chain, and making data understandable through tables, figures, and graphs.
Engage Your Stakeholders
Getting your investors and analyst perspective on your priorities can help your company steer in the right direction. You will understand your ESG opportunities and risks through the engagement and support of your initiatives.
Engagement also involves getting customer, employee, and community organization feedback on the company’s performance. Such feedback will help the company identify areas of improvement. A company will strengthen its relationship with stakeholders and enhance its reputation through engagement.
Integrate Your Corporate ESG Strategy Into The Overall Strategy
Investors are interested in how companies respond to macroeconomic trends, including identifying ESG opportunities and risks. An investor will also want to know how a company positions itself for longevity in business success.
As an ESG-leading company, integrate ESG strategies into the overall business strategy as follows:
- Set ESG priorities in alignment with your business mission and values
- Integrate ESG considerations into your business decision-making process
- Incorporate ESG considerations into your business plan and budget
ESG Training And Education
Lastly, a company can improve its corporate ESG strategy by investing in employee training and education. Training and education help build a sustainable and socially responsible culture, as employees will have the skills to support the initiative.
Increase Your ESG Scores And Ratings
Every company is unique, and improving the ESG strategy should be an ongoing process. Therefore, while there is no standard approach for all companies, an ESG-oriented corporation should approach the above process in the long term. This is primarily because ESG issues like climate change, social well-being, diversity, and public health will remain with us for years.