5 ways to develop a successful ESG strategy for your company

Once upon a time, Wall Street viewed profitability and improving the world as mutually exclusive goals. Times have changed. Today, many consumers prefer brands that align with their values — and many of those values center around environmental sustainability.

A company must implement a robust environmental, social, and governance (ESG) strategy to succeed in today’s marketplace, according to the Appspace 2024 Workplace experience trends & insights report. 72% of all respondents said a company’s ESG strategy is very or somewhat important to them. We surveyed 900 people working full-time at companies with over 1,000 employees in either a hybrid and/or fully remote work setting.

Business leaders should know that employee desires go beyond surface-level changes, according to the report. They envision:

  • Reduced commuting emissions: 40% want a digital hub-style work arrangement for eco-conscious flexibility.
  • Automatic energy savings: Features like smart lights and optimized climate control are high on their wish list (38%).
  • Health and resource awareness: Employees want air quality and occupancy monitoring (30%), showing concern for both the planet and their wellbeing.

So, what is an ESG strategy? This blog will answer that question and offer five ways to develop one that fosters success and sustainability.

1. Set clear goals and objectives

An ESG strategy is useless if it’s vague and fails to engage meaningfully at all company levels. The foundation of a robust ESG strategy lies in answering three critical questions:

  • Where can your organization make the most positive impact?
  • What resources and capabilities does your organization have to effect change?
  • How do the company’s ESG efforts align with your broader mission?

Patagonia is an example of a company making a significant impact with its ESG policy. It donates 1% of sales to environmental preservation and has committed to becoming carbon neutral by 2025.

Once a well-defined ESG strategy is established, a system for measuring goals must be in place. One proven approach is adopting the SMART formula (Specific, Measurable, Achievable, Relevant, and Time-bound).

2. Cultivate stakeholder engagement and ensure transparency

Consulting stakeholders in developing an ESG strategy is crucial. Their diverse perspectives will reveal key ESG priorities, deepen understanding of ESG challenges, and spark innovative solutions.

Hold meetings or forums with key stakeholder groups to discuss ESG strategies, gather input, and engage in direct dialogue. This inclusive approach enhances trust and ensures that ESG efforts are aligned with stakeholder expectations and contribute to sustainable, long-term success.

3. Integrate ESG into company culture and operations

Your company’s ESG strategy can’t just be a set of external commitments. It must become part of your culture, starting with a visible commitment from leadership at all levels.

Here are just a few ways you can incorporate ESG into your company culture:

Integrate ESG into daily operations: Embed ESG principles into every business decision, from minimizing office waste to selecting energy-efficient options.

Training and education: Develop educational programs that explain the principles of the ESG strategy. Offer training on how employees can contribute to its success through their roles.

Apply performance metrics: Reward employees for leveraging their roles to achieve key milestones in the ESG strategy.

Implementing operational changes to mirror ESG policies demonstrates genuine commitment. Examples include upgrading to energy-efficient systems at the company’s locations and investing in renewable energy sources. Partnering with suppliers who engage in sustainable practices that reflect the company’s ESG strategy is another option.

4. Leverage technology and innovation

Implementing ESG involves processing extensive information. Technologies like the internet of things (IoT) and blockchain significantly support ESG strategies, but artificial intelligence (AI) stands to make the most considerable impact.

AI tools are capable of ingesting large swaths of information and analyzing them to help business leaders make data-driven decisions to further their ESG goals. For instance, analyzing the carbon footprint of a particular product you manufacture can help you determine if you’re manufacturing the item in a way that aligns with your ESG efforts.

ESG strategies also benefit from the surge in sustainability innovations. For example, advancements in solar, wind, and hydroelectric power are reducing our reliance on fossil fuels.

Technologies for water conservation and carbon capture and storage (CCS) are boosting water efficiency. On the governance front, technologies that enable remote work empower companies to offer employee wellbeing programs that feature flexible work arrangements, mental health support, and inclusive workplace policies.

For more ideas on remote work tech, specifically internal communications tools, to promote ESG in the workplace, have a look at this article in Strategy magazine.

5. Regularly review and adapt ESG strategies

Here are a few essential best practices to ensure constant improvement in ESG performance:

Integrate ESG principles into your business strategy: Begin with a comprehensive review of your existing practices to identify areas of operation that are misaligned with your ESG goals.

Understand your ESG ratings: If you get an ESG rating from an organization such as MSCI, consider it a signal for how well your company manages related risks and opportunities compared to peers. These ratings are crucial as they improve a company’s reputation, attract investment, and potentially lower financing costs.

Develop an ESG-oriented culture: Business leaders must sincerely advocate for ESG values to weave them into the fabric of company culture. By educating employees about the significance of ESG and rewarding their contributions, companies can inspire their workforces to embed these principles into their daily tasks.

Want to know more about ESG in the workplace and what employees today expect? Download the report.

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