This is how positive impact creates financial success
Over the past few years, ESG (Environment, Social and Governance) has evolved to become a misguidingly positive business buzzword. To be clear, I am not a big fan of abbreviations in any business environment, but for lack of a better alternative, let’s roll with ESG…
Companies are increasingly realizing that ESG is not just a matter of ethics, let alone corporate image, but a critical factor in their long-term success and profitability. The importance of ESG has been magnified by the global challenges we face today, such as climate change, diversity and inclusion, human rights, consumer protection, and governance quality and transparency. In our upcoming ‘Positive Impact Tour’ in Copenhagen this June, nexxworks and I (as your moderator) will explore how companies can integrate ESG into their strategies, in ways that go beyond branding and marketing, and how they can measure and report on their impact.
Here are a few of the top questions we will tackle during our visit to Copenhagen:
How can companies balance between financial success and creating positive impact?
Some of the most successful companies at the moment, such as the outdoor brand Patagonia or the Dutch chocolate brand Tony’s Chocolonely, were able to prove that success and impact aren’t two mutually exclusive ends of a spectrum. Quite the opposite:
Financially successful companies are the ones that are able to create the most positive impact, and the most impactful companies are the ones that manage to create financial success in an increasingly consumer driven market.
The two create a powerful synergy when they meet in the middle of that ‘spectrum’.
ESG initiatives can offer significant positive impact in the long run, though sometimes implementing them can be more expensive in the short term. Companies could start by prioritizing ESG initiatives that offer both cost savings and ESG benefits, such as energy efficiency measures, sustainable procurement, and reducing waste. Additionally, companies can implement cost-saving ESG initiatives, such as reducing water consumption or shifting to renewable energy sources, that also have a positive impact on the environment and society.
How can companies make ESG a priority and integrate it into their DNA?
Making ESG a priority starts with a clear commitment from the top leadership. Companies should educate employees on ESG, encourage ESG-friendly behavior, and make ESG a key factor in decision-making processes. There are many ways to go about that, of course. It could be driven by a passionate CSR manager. But a task force to drive ESG initiatives and regularly engage with stakeholders on ESG matters could work just as well. By making ESG an integral part of a company's culture and values, it will help ensure that it remains a priority in the long-term.
How can ESG become a key part of decision-making in a company?
ESG considerations should be incorporated into every aspect of a company's operations, from product development to procurement and supply chain management. Companies need to make ESG a key part of decision-making by regularly engaging with stakeholders, considering the impact of their actions on the environment and society, and making responsible and sustainable choices. By prioritizing ESG in decision-making, companies ensure that they are considering the long-term impact of their actions on the environment and society.
How can companies use ESG data and metrics to track their progress and improve their ESG performance?
To measure their ESG performance and track their progress, companies can use various ESG data sources and metrics, such as sustainability reporting frameworks like the Global Reporting Initiative (GRI). Companies can also use ESG ratings and scores provided by independent ESG ratings agencies to benchmark their performance against their peers. By regularly tracking and reporting their performance, companies can identify areas for improvement and implement strategies to enhance their ESG practices.
How can companies measure the impact of their ESG initiatives on cost, revenue, and the planet and society?
To measure the impact of their ESG initiatives, companies can use various metrics and KPIs, such as CO2 emissions reductions, water conservation, and waste reduction. Companies can also use social impact metrics, such as the number of employees trained in diversity and inclusion, the number of products made from sustainable materials, or the number of suppliers engaged in sustainable practices.
By regularly tracking and reporting on their ESG impact, companies can demonstrate the value of their ESG initiatives and make data-driven decisions to improve their ESG performance and achieve their sustainability goals. Impact reporting in 2023 and beyond should move beyond boring numbers and reporting, and can really play a pivotal part in bringing the companies stakeholders along in the overall ESG strategy. Companies like innocent drinks and Tony’s Chocolonely with their Annual FAIR reports have long realised the value of these reports in their overall marketing and branding.
But above and beyond all the ‘how’ questions we can ask ourselves, there is the big ‘why’ question to explore; WHY bother? No matter what perspective we take – whether it is a more activistic vision on the existence of mankind, or a more business driven angle on the future profitability of our companies - we are obviously rapidly moving into an era of reconsiderations. Whether pushed by laws and ESG regulations on a national and European level, or by IPCC reports showing that swift, urgent and resolute action needs to be taken to even remain within the Paris agreements; we as entrepreneurs and business people have an important role to play. A more serious look at ourselves through an ESG lens will be the first step to take.
Are you interested in learning more about the business opportunities gained from ESG? Join me and nexxworks in June in Copenhagen, one of the most sustainable and energy efficient cities in the world, to visit some of the most successful pioneers in the matter!