With a global pandemic (mostly) under our belts, we have learned the incredible importance of creating not only a sustainable environment but expanding that sustainability to our social and governance sectors.
We understand that sustainability on a personal level is important, but why does it matter if it flows into the social and governance points? Let’s explore ESG a bit further:
What is ESG? (1)
- Environment – Arguably the most important part, a sustainable environment is vital for all. How a business utilizes and manages its energy can have a significant long-term impact.
- Social – The social aspect depends on a company’s responsibility towards its community. Whether that’s positive or negative, the aftermath will ultimately have a cause-and-effect.
- Governance – Lastly, Governance is actively keeping up with regulations, best practices, and offering transparency to help make rational effective decisions.
Why Does ESG Matter?
Overall, it appears that companies that take a proactive approach with ESG tend to outperform those that do not. These businesses find themselves to be better equipped to handle extreme climate situations, respond to new demands, and implement new changes towards a more sustainable footprint. By mitigating risks earlier on, businesses can save potentially millions on expansion projects or revamps by opting for renewable and zero-emission projects.
One of ALI’s past speakers, Gihan Hyde, works with Corporate Communicators to bring ESG stories to life. In her ESG based article, she outlines how ESG is not only an organizational issue (and compares it to wedding cake) but states “PR & comms…creates an opportunity to…craft and lead the ESG narrative” to further create solutions and actionable plans for businesses.
ALI Conferences ran a survey on whether or not a person’s organization has started an ESG communications plan. A whopping 76% of respondents stated ‘Yes‘, while 22% of respondents answered ‘No’ and 3% stated it was ‘Not a priority at this time.‘ These numbers indicate that utilizing ESG best practices can help companies become more resilient and being ready for the possible impact of any emerging issues.
Now that we understand the importance of ESG, how can a business begin strategizing? Mack Bhatia from TheSustainability (2) offered several strategies to utilize for ESG:
- Communicate often with stakeholders (i.e. investors, suppliers, employees). Clearly communicating your strategies and goals is a great way to build trust and take responsibility.
- Offer full transparency and credibility where it’s due. By easily offering ESG strategies and solutions, you can easily improve your professional credibility and boost your social standing.
- Communicate with empathy. By fulling understanding and knowing what issues need to be targeted, you offer another layer of transparency with your investors by addressing their concerns.
- Offer solid facts and data. Honesty and empathy are important but so is data. Your investors want to see a steady trajectory for improving your ESG score and how that will be accomplished.
- Be vocal about financing ESG projects. As mentioned above, zero-emission and renewable projects are excellent waypoints towards creating a strong ESG business. Be direct and communicate the importance of these projects when possible.
From this information, investors are progressively assessing companies in terms of their comprehensive performance, long-term sustainability, and societal impact. The data and importance of ESG cannot be overlooked and sustainable projects and funding should be a requirement for all companies.
- “The Importance of ESG Strategy.” Sphera, 12 Apr. 2021, sphera.com/spark/the-importance-of-esg-strategy.
- Sustainability and ESG Solutions, and MACK BHATIA. “Effective ESG or Sustainability Communication Strategies to Address Increasing Investor Interest.” Thesustainability.Io, www.thesustainability.io/effective-sustainability-communication-esg-strategies-to-address-increasing-investor-interest. Accessed 25 June 2021.