ESG strategies have become necessary for companies as society becomes more aware of environmental and social issues. ESG, which stands for Environmental, Social and Governance, is a framework companies can follow to examine their impact on such issues.
In recent years, many organisations have paved the way towards better ESG strategies. In an article by Thomson Reuters, it was predicted that ESG strategies will push companies to transform their business structures as ESG has shifted into an essential part of corporate strategy.
However, for many, this may still be a novel concept. So, what does ESG mean?
What are ESG Strategies?
In short, ESG strategies are guidelines or frameworks that companies can follow to address environmental, social and governance issues within their business operations. It may seem that ESG is solely for environmental issues, but in fact, it also encapsulates social and governance issues such as human rights and data privacy.
The emergence of ESG initiatives is said to be due to companies seeking regulatory compliance. However, as can be seen in recent years, it is now becoming a standard that organisations should have to stay relevant – both in business and recruitment.
The goal of having ESG strategies in place is to have a sustainable and responsible business. ESG goals should not only consider financial performance but also the organisation’s impact on society and the environment.
ESG initiatives can include the following:
Companies Paving the Way for ESG
In 2020, Microsoft committed to more sustainability. They aim to ensure technology is inclusive and trusted and promote sustainability. By 2030, their goal is to become carbon-negative, zero-waste and water positive. Additionally, by 2025 they are aiming to protect the land that they use.
In their most recent report, they have invested in 1.4 million tons of carbon removal in 2022 and turning them into recycled marketable products. In the same year, they also created a circular business approach by diverting 12,000 metric tons of waste from landfills and incinerators.
Their goal to be water-positive has progressed through their efforts that have increased water access and sanitation for just under one million people in 2022. They have also protected 12,270 acres of land in Belize in 2022, which is more than the 11,206 acres they use
Accenture has declared that they integrate sustainability in all their practices to create business value with sustainable impact. Their ESG strategies include being a responsible company, providing sustainability services, embedding sustainability in the design process and providing societal impact as responsible citizens.
Julie Sweet, chair and CEO of Accenture stated, “In 2025, we’ll be talking about how every business is a sustainable business.”
Through their efforts and ESG impact, Accenture has gained various recognition in ESG such as being included in 3BL Media’s 100 Best Corporate Citizens for 12 years in a row and Ethisphere’s World’s Most Ethical Companies 15 years in a row.
How Companies Can Implement ESG Strategies
If one is not in place already, employers should start thinking about building their own ESG strategy by conducting a thorough evaluation and feedback process. By doing so, they can identify which areas of their business can be improved using ESG strategies.
Here are some steps that can be followed:
- Initial evaluation of current processes:
This can include evaluating carbon emissions, water usage and labour practices. Employers could also involve employees in the process to understand their attitudes on the matter.
- Incorporating feedback:
Within this step, an organisation can involve feedback from employees and stakeholders. It may be beneficial to have a conversation with external partners such as suppliers and customers, to see if there is an alignment in interests.
- Implementing a clear strategy:
After gaining a nuanced understanding, the next step should be working towards setting up and implementing a clear strategy that will help attain these goals. Having a solid base for the strategy is important.
- Review and reiterate:
As time progresses, changes will also surface. It is key that companies stay on top of relevant shifts and updates in business and society to keep alignment in their ESG strategies. It should be noted that this process is not a single solution, but consists of various solutions that may shift over time.
As society moves toward more awareness of ESG, companies should also be aware of this. Both employees and industry practices are seen to move towards more sustainable and ethical approaches. Moving forward, companies should constantly evaluate their ESG strategies to improve their sustainable impact and maintain compliance in their business practices.