ESG is the new buzzword in the power corridors of business and no business wants to be left behind in the race to become a sustainable enterprise. Gone are the days when only financial investors looked at the ESG related aspects of a business, as now everyone from the government to media are paying more attention to how ESG compliant a business is.
Why You need an ESG Strategy
Not having an ESG strategy is simply not an option for today’s businesses as government regulations, investors, and stakeholders demand accountability from the businesses when it comes to their environmental, societal and governance impact. Having an ESG strategy will not only allow you to track your ESG progress, but will also help you set and achieve new sustainability goals. In this article, we will discuss some basic steps for creating an ESG strategy for your business.
Assess Current State of your business
The First step for creating an ESG strategy is to assess the current state of your business. But before doing this you will need to define the ESG metrics that you want to track as these metrics are essential for assessing the current ESG state of your business. There is an important caveat here as you need to identify the most relevant metrics for your organization.
All ESG metrics are equally important, but you can’t track all at once and will need to define your priorities. Identify the most appropriate ESG metrics to track and then assess the current state of your business by using these metrics. If you happen o have a large organization, then you may discover that some departments or silos perform better than others based on these metrics while others may not even be aware of ESG. This assessment will give you a complete picture of where your organization stands in terms of ESG.
Set Goals and Objectives
Following the above steps should give you your ESG stats alongwith the primary ESG metrics that you need to track. You now need to set up ESG goals and define what objectives you want to achieve by formulating an ESG strategy. You need to clearly define strategic objectives that will allow your business to attain a higher ESG score and improve the performance of business at the same time.
Once you have clear objectives, you can start working on clear goals that are tied with these objectives. These goals will allow you to measure the real impact of your ESG focused activities, position your company among your peers, help improve performance of your business in key areas, and help you integrate ESG practices in your business decisions.
There is no one-size-fits-all approach to goal setting as each organization is different and can use a wide variety of approaches to set their ESG goals. The main point is to make sure that the goals and objectives are relevant for your business.
Define Key performance metrics
Once you have identified the main goals and objectives of your ESG strategy, it’s time to identify key performance metrics for measuring your success with these goals and objectives. It’s possible that success of a goal or objective can be measured using more than one key performance metric, and in such a case you must choose the metric most relevant to your business.
Set Action Plan and Measure Key Performance Indicators
Now you need to chart out an action plan that will include all the activities that you need to undertake in order to achieve the goals and objectives identified in your ESG strategy. You can also develop separate action plans for each individual goal or objective and there may be department level action plans for various departments and silos of your organization.
You can use centralized management systems or software tools to track key metrics and performance. Modern data collection tools can help you track data and also display or report in an aesthetically pleasant manner.