The four truths about implementing a successful ESG strategy

(© kmingwwww - Shutterstock)

Something I love about my role at ServiceNow is that it allows me to keep my ear firmly to the ground.

One topic that has without doubt taken center stage in my conversations with business leaders over the past year is the rising importance of a solid ESG strategy. With more and more regulations cropping up, and consumer and employee demand for more responsible processes increasing every day, companies are looking at how they can take action. And yet, it’s a difficult topic to navigate.

With so many imperatives surrounding ESG landing on management ears every day, so many potential areas for investment, and no clear way to measure success, taking control of your strategy can seem daunting, and — to many — particularly in a delicate economy where we are striving to do more with less, impossible.

But in my experience, the cost of doing nothing far outweighs the cost of taking action.

So, to dispel the most common ESG myths and help business leaders looking to get started, I’d like to share some key learnings:

1. Everyone’s ESG journey is different

ESG is such a large, complex topic, it’s impossible to come at it like you would another project. There’s no one-size-fits-all approach. Business leaders must ask themselves what ESG means for them, and for their company specifically. How you approach your strategy also depends on the maturity and scope of your operations.

Working across many different countries, I’ve witnessed the importance of tailoring your approach first-hand. Broadly speaking, for companies in Western Europe, ESG-related matters are likely to be very much at the forefront of the agenda. So, it’s a case of aligning legal demands, values and customer expectations and turning them into tangible, consistent measures across your ecosystem of partners and suppliers – for meeting carbon emission goals across scopes 1,2 & 3 for example or community impact. Admittedly no small feat, but here, ESG is already an integral factor driving strategic planning and decision-making today. However, for organizations in other areas, say the Middle East or Africa, the ESG journey is much younger, because up until now the focus has been on rapid growth. It’s important that leaders in the region take the time to properly visualise outcomes and areas of focus and strike the right balance in timing their investment in ESG – too soon could restrict their ability to deliver this exponential growth, too late could reduce their ability to partner with other global organizations and reach their true growth potential.

2. Talent is a crucial component 

If I could ask readers to take one thing away from this article, it’s the idea that nurturing talent and implementing a strong ESG strategy go hand in hand. I’ve heard it said before that the regulations and reporting requirements associated with ESG have been thought to contribute to the ongoing skills gap in the tech industry.

But this isn’t necessarily the case.

In fact, the new generation of digitally native talent is more invested in socially and environmentally responsible practices than any generation before it, with 1 in 3 members of gen Z agreeing they’d turn down job opportunities for the sake of ESG concerns.

Candidates want to work for companies that align with their own personal values, and they’re not willing to compromise on this. Crucially, they don’t need to, because digital skills are in high demand, they have the upper hand. What is more, ESG management is, in part, a digital skill.

So, for companies looking to mitigate the impact of the digital skills gap, my advice is to invest in your talent as much as possible. Hire the right people with the right digital skills, nurture those skills wherever possible, and look to implement sustainable, socially responsible policies that give you an advantage in hiring more of those people.

3. Companies should take a control tower approach

One of the most commonly known challenges of ESG is that it can be difficult to measure its success. And it’s true, measuring success — or even defining what success looks like at all — can be challenging. But it’s not impossible.

Companies across Europe have made a whole host of commitments — to be carbon neutral by a certain year, or to have reduced global emissions by a certain percentage, for example. But before you do any of this, it’s important first to look at all of your processes and evaluate what needs fixing in order to make this happen.

And the way to do that is by adopting a control tower approach.

The right technology can help you quickly and easily look at all your operations and suppliers, ensure everything is connected, and that you have complete visibility across the board.

This not only helps you figure out any areas for improvement, or where you need to focus your attention first, but also allows for a more organized approach to governance and compliancy. We’re seeing more and more regulations around ESG reporting, and earlier this year European Parliament announced amendments to the Corporate Sustainability Reporting Directive that cover more organizations, including SMEs.

Put simply, ESG is as much a legal necessity as it is a branding matter, and if you’re not prioritizing full visibility over your strategy, you risk falling behind.

4. Innovate, innovate, innovate

ESG is a constantly evolving discipline where not only the goalposts, but the skills and tools needed to get there are on the move.

In times of flux we need to be agile and adapt quickly to stay ahead. Innovation in the broadest sense of the word, creating a novel approach to operations, is key. We are also up against time, in the case of the ’E’ in particular, and here investing to develop innovations that can be deployed at a scale fast enough so that costs are brought down to a viable level is perhaps the biggest innovation race of our time.

Whether or not your organization will be able to drive that change for the future, with the right tools, we can all be innovative in deployment of our ESG strategies and impact.