Communication vs Implementation: Environmental, Social & Governance (ESG)
Sustainability is becoming a license to operate, therefore attention to ESG has become a non-negotiable for most businesses. However, while there is no hesitation for businesses to be increasingly vocal about their ambitious ESG journey, few are actually implementing policies to improve their environmental or social impact as they have communicated.
Research conducted in 2022, suggest that 91% of organisations across Europe have maintained emphasis on their ESG credentials. However in 2023, company investors had only a 45% confidence that their businesses would achieve carbon neutrality by 2040.
In addition to this, sadly, over 50% of organisations, across a variety of industries are promoting better ESG credentials than their actions justify according to investors, perhaps demonstrating a worrying trend of businesses failing to implement the changes suggested by their lofty ESG claims.
The time will come where organisations must be able to provide proof of action, and to risk a reputation over false claims would be a foolish decision to make. People invest their time (employees) and money (consumers) into companies they believe in, and it is no longer the case of cost versus value. ‘When it comes to mitigating climate change or promoting social causes, companies’ credentials have become important considerations for consumers, particularly those from generations Y and Z’. (Banerjee, Raconteur Sustainability Report 2023).
So, what is the barrier between businesses implementing what they communicate?
Research shows that businesses across Europe intend to increase their investment into ESG over the next 25 years, however currently investors believe only 25% of companies will be spending enough to achieve their ESG targets! Despite this increasing to 69% by 2050, the time is now to get a head of your competitors and start being the business you want to be and, in some cases, already say you are.
The best approach to achieving big results is to take small, regular steps, communicating as you implement.
Step 1: What do your stakeholders want to see from you? If you haven’t already, consider conducting a Materiality Assessment. Materiality Assessments are designed to help businesses identify and understand the relative importance of specific ESG and sustainability topics to their stakeholders. This will be the key to where you focus your efforts, and how you can get the best return.
Step 2: Based on the results of your Materiality Assessment, cherry pick 3-4 focus areas for the current financial year and find your perfect ESG partner that can drive these forward. A pick and mix approach would allow you to align your ESG journey with your environmental strategy as well as spread the cost over a period of time to suit your needs.
Step 3: Share an annual ESG report, each one building on the last. The perfect place to document all your achievements with measurable and clear data.
Research: Page 4 of Raconteur Sustainability Report
Start meeting the expectations of your stakeholders and enable your business to make a real impact on humanity and on the planet whilst seeing a positive financial return. It is a win win!
