Over the last few years, especially after the onset of Covid-19, companies have focused more on sustainability through the environmental, social, and governance (ESG) lens. However, ESG is not a new term in business, but you must start integrating ESG into business strategy.
Companies have reflected on various non-financial factors that affect the company’s performance as significant considerations in investments. Even though some companies have integrated the ESG principles into their business strategies for some time, other businesses are yet to find out about this relatively new term.
This article will focus on some tips to integrate ESG into business strategy that can benefit businesses to kick off their ESG journey. It will also provide some fresh ideas for companies that have already integrated to review their approach.
What is ESG?
First, let’s take a quick review to understand ESG before digging into various tips to integrate into your business strategy. ESG is an acronym for Environmental, Social, and Governance. It involves identifying, analyzing, managing, and communicating the various non-financial factors affecting the organization’s performance using the three central pillars: environment, social, and governance.
To integrate ESG into your business strategy, you’ll need to leverage platform-led ESG integration services. Such services focus on all aspects and material factors that can directly impact your business, improving your organization’s performance.
Here are five tips for integrating ESG into your business strategy.
1. Get Your Data Right
The greatest challenge of successfully integrating ESG into business strategy is the lack of timely and continuous data. To ensure data optimization for ESG integration, you should first create internal compliance metrics that will help you track and control risks.
However, the process is continuous and tedious; hence, you should invest in the right technological tools that will help to do this efficiently. For example, you can invest in ESG monitoring software that will help you continuously collect, categorize, and analyze all your crucial data.
Once your ESG data is well organized, it becomes easier to get a starting point where you can decide on the best way to reach your organization’s goals.
2. Communicate Your Strategy
Armed with clear and well-measured ESG data, you can now set reasonable goals for your company. This will involve setting achievable short-term and long-term goals, committing to your part, and availing the necessary resources to achieve these goals.
Once you have committed to your strategy, you should communicate it to various stakeholders. Communication of your strategy to stakeholders is crucial in ESG integration. By doing so, you will be ensuring the needs of various stakeholders are met effectively.
To ensure your performance improves and your ESG integration is effective, you should always prioritize the needs of your stakeholders according to their impact and expectations from your organization.
You can also develop a corporate position statement that will communicate your level of understanding and commitment to ESG.
3. Adopt Modern Technology
The ESG programs are ever-changing in terms of goals and definitions. However, some recent issues are now well-defined, making it easier to determine the best integration solution. Through modern technology, you can keep your business sustainably compliant.
For example, one of the top environmental goals is to ensure zero emissions by 2030. To ensure your organization complies with this regulation, you can adopt new technology and clean energy innovations like solar power. Such energy sources are cheaper while at the same time reducing carbon emissions, making them sustainable.
In addition, you can adopt modern technology in the governance and administration of your organization. For instance, good customer relationship management software will enable you to relate with your customers effectively. Thus the importance of integrating ESG into business strategy.
4. Enhance Social Equality
Different social movements have been at the forefront of ensuring social equality in all private and public entities. Investors and customers have also voiced the issues of social equality. Therefore, you are expected to be proactive and supportive of social equality matters as an organization.
The best way to ensure your organization has observed social equality is through hiring from all races, including minorities, and ensuring equal pay and chances of promotions and training. There should be no traces of racial discrimination in your organization. Furthermore, you can also allocate money for philanthropic projects championing social equality.
5. Partner With Like-Minded Groups
The main goal behind ESG is to impact your organization through shared efforts positively. Therefore, it’s more important to partner with like-minded entities. For example, you can partner with local governments and ethical groups. Working with entities with similar goals ensures that the same practices are being adopted elsewhere.
Focusing on your effort will only bring minor and short-lived effects. Therefore, it’s vital to discover the strategies those around you adopt when preparing for your ESG integration. Identifying sustainable companies or like-minded entities is easy, as most publish their commitments and goals through their websites.
Integrating ESG into your business strategy gives you a competitive advantage and improves your company’s performance. However, it would help if you kept on reviewing your ESG strategy often in a holistic manner as ESG keeps changing in terms of its goals.