I recently wrote an article for SME Today explaining why SMEs are key to ESG. I talked about the increasing pressure to report on your ESG activities and the opportunities that can be had for those businesses that embrace the challenges.
However, it’s one thing understanding why you ought to be doing something, but quite another to know how to do it. ESG is certainly a hot topic, and the misconception that you must tackle it all right now, can overwhelm businesses and result in some messy, incoherent behaviour.
So, in this blog, I want to reframe the challenge for you and encourage you to take a step back and adopt a holistic view of your entire business. Instead of trying to “solve” ESG, think of this as taking responsibility for the impact that your business has on people and the planet to become a genuine, honest and accountable business.
And there are very specific actions you can take to do this…
Top-level commitment is a must
The CEO, the chair, the board, the CFO need to understand why ESG is important and be genuinely committed to taking responsibility for the environmental social impacts of the business.
Without everyone sharing the commitment and understanding the rationale behind it, meaningful change won’t happen, and you will run into allegations of greenwashing before too long.
Don’t wait for the perfect solution
It’s better to get started and learn as you go, than wait for a perfect solution that doesn’t exist.
In truth, consumers, members of the public, customers, your suppliers, everyone understands that this is a tricky challenge that you won’t be able to fix in one go. What they do expect, though, is that you’re committed to doing things better. And it is getting started, it is action, it is learning that backs up commitment.
Do the thinking so you can prioritise
There are lots of topics that fall under the banner of ESG and, in reality, you won’t be able to tackle them all. To make the biggest difference, you need to find out what the biggest impacts that your business has and focus on those. Not only will this affect the most positive change, but doing anything else will look like greenwashing. So, step back and look at the kind of business you are, how you work and what industry you’re in. Your biggest impacts and opportunities should quickly leap out.
Be open & honest on your progress
As I’ve said, credibility comes from focusing your time and energies on the biggest impacts that your business has from a social or an environmental perspective. That means both that you’ll be wresting with knotty problems, and that there will be areas that you are not focussing on.
Talk openly and honestly about both of those things. This is how most businesses approach other challenges. Yet, there is a reluctance to admit this with ESG. So, treat this like any other problem and, alongside your actions, be prepared to explain your challenges and have substantive answers to justify your priorities. ESG is not a marketing opportunity to shout exclusively about the positive things.
Set ambitious goals
Your priority focussed strategy action plan should be realistic, but I’m in favour of setting ambitious targets, not least because that is what will get you as far along your journey as possible. The ultimate goal is to have a sustainable, viable future for all of us, so don’t restrict your vision to just what you have full confidence in achieving.
And remember, this is an area benefitting from lots of innovation and new technology. What you think isn’t possible now may be achievable in a couple of years. Aim unashamedly high.
Measure and report
Much of the pressure imposed on businesses around ESG, lies in the measurement and reporting requirements. And though they can seem onerous, it’s hugely important for two reasons. Firstly, to show people how you’re doing, but also to hold yourself to account and allow yourself to know what impact your business has.
I do think reporting obligations can be helpful for a business to kickstart some very useful thinking and to gain insight into your own activities. But I would guard against inappropriate or excessive monitoring. It’s easy to get bogged down in chasing exact figures, which easily becomes very time consuming and a barrier to making change. Make sure you’re only calculating to the depth of data that you need to make progress. And use certifications to help you progress, not as objectives in themselves.
Some useful resources
If you’re looking to stay on top of what is going on, I would recommend signing up to ‘Sustainable Views’, from the Financial Times. It is very good at setting out the macro regulatory issues impacting ESG.
The Guardian does a great weekly summary email called ‘Down to Earth’ on this topic as well, pulling out relevant stories each week. You can sign up here.
I would also advise that you look at industry specific press, so you are kept abreast of any issues that are particularly relevant to your business.
Another resource that can help prompt thinking is the B Corp Impact Assessment. Even if you do not want to become a B Corp, the assessment forces you to think about everything relevant to your business.
Ultimately, though it may seem overwhelming, focussing on your social and environmental impact brings positive benefits, at the same time as managing key risks. If you’re doing it right and in a genuine way, there’s a fantastic message that you can tell about your purpose and your mission.
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