5 Indicators to Evaluate your ESG Strategy and Future-Proof your Business.
ESG is the new normal. It is a necessary step that businesses are taking to secure their assets within the context of the ongoing market transformation. However, the purpose of ESG is more than just compliance, it’s about bringing about change in the world, strengthening society and the environment, and creating outcomes that fuel business growth. In order to achieve this, however, more than good ideas and intentions are needed. For ESG principles to work, they need a tangible, well thought-out action plan that achieves real results. In this article we’ll share with you 5 indicators that will help you assess if the ESG strategy you are implementing will truly have a positive impact on your business.
1. It Weighs Climate and Business Risks Equally
One of the major mistakes that companies make when designing their ESG strategy is to think of climate risks as something secondary. The issue with this is that it immediately showcases a lack of commitment that will not go unnoticed by investors. When going the ESG route, investors will be looking for the most ambitious strategies that truly understand and address climate risks in a holistic way. Betting on sustainability means understanding the severity of the climate change problem. Betting on half-baked strategies that do not address ESG fully will only show your lack of commitment to all stakeholders.
2. It integrates ESG in the DNA of the Company
This means involving all stakeholders: from the C-level decision makers to all collaborators. The problem with add-on ESG strategies is that they lack the robustness of any other area within the business. The best example of this is hiring a Sustainability Director and expect him to solve the problem herself. Spoiler Alert! That does not work. For ESG to work as intended, it needs to be built in the structure of the company. Inputs, impacts and risks must be analyzed across all areas and throughout the value chain. Only then will ESG actually impact all stakeholders and make significant impacts overall.
3. It incorporates the social side of sustainability
The definition of sustainability is often forgotten and regarded only as environmental, when the true value of something sustainable relies on its balance between people, profit and planet. While ESG strategies heavily rely on environmental metrics, it is fundamental to never forget that social efforts are just as important. Even within Green Building Certifications, social sustainability marks the difference between a strong standard and a lower one. Incorporating this aspect strongly in your strategy will certainly minimize risks and make it more resillient.
4. It trusts high standards
In line with our first indicator, choosing high standards draws the line between understanding and not understanding climate risks. In this regard, it is as simple as the difference between a 20% energy and water savings and a full fledged strategy that considers GHG 1, 2 and 3 emissions, waste, transportation and occupant health and comfort. In ESG, going bigger is certainly better. The more ambitious the standard, the more certainty you will have that your strategy will hold up in the future.
5. It understands that 2030 is just around the corner
2030 goals still seem too far from today, but reality is that they are less than 8 years from now. If realizing that does not wake a sense of urgency in all of us, we are doomed. ESG was created in the early 2000s to anticipate the issues that we are struggling with today. We are running out of time; and not just to accomplish the goals we have set for ourselves, but to actually start doing something serious, measurable and impactful that fosters change now.
It is not too late yet to jump on the ESG train, but if choosing to do so, you must bet confidently on a strategy that takes into account all the aforementioned.