Organizations across the globe are recognizing the importance of environmental, social, and governance (ESG) initiatives and what they mean for moving business forward. Many leaders have taken bold steps to advance ESG goals. Others are just beginning to dive into ESG and are considering ways to embed it into the company’s overall strategy.
I spoke with business leaders on the Innovation Today podcast to get the lay of the land on why and how organizations should incorporate ESG into their overall strategy and operations to set themselves up for ESG success.
Far beyond meeting compliance, businesses are discovering that the effects they have on the environment, society, and risk management are good for business. According to Trish Beltran, manager of ESG advisory services at RSM, the benefits include better:
Long-term financial performance
Employee attraction and retention
Yet ESG is complex, and companies are looking for solutions that can help achieve ESG goals. “Really, the first step is understanding where you are,” Beltran says. “That way, you have a better pulse on what is feasible for your company to do. You probably have current initiatives already, so you just need help bucketing those into the ESG categories.”
The key is to start in some small way by setting actionable goals. The first question companies need to ask is, “What are our current ESG priorities?” Secondly, “What strategies are we using to achieve our ESG goals?”
Although some target dates are in the distant future—2030, 2035, 2040, and later—it doesn’t pay for companies to wait until the last minute to meet compliance standards, according to Carey Blunt, global head of ServiceNow solutions at Fujitsu.
“Some of these targets are quite far off,” he says. “It will be very easy to kick the can down the road and sort of forget about those things for a while because they seem like they're too far away in the future. In order to hit a goal sometime in the future, it's important to have incremental goals and targets on that journey.”
He recommends companies start by setting SMART goals, which are specific, measurable, achievable, realistic, and timely. Then they need to think about the data surrounding those initiatives: Is it available, and how often do they need to collect it?
Achieving ESG goals starts by gathering data, according to Alexey Klimenko, CEO and co-founder of Emission Box. But the path from data to ESG action is crucial. “Having data alone doesn’t matter,” he says, “but doing something about that data is what matters. You need the right tool to see all the data in one place so you can focus on actions.”
Software systems can collect data, predict outcomes, and direct efforts to help companies reach goals.
Breaking down overall ESG goals into measurable milestones allows companies to track progress through systems that collect data on a regular basis. That data provides a visual understanding of where programs and projects stand in relation to goals. As companies meet one target, they move to the next, entrenching ESG into the culture.
“If they do that for one goal or two goals and start to measure the data, they iterate and then add more and more over time,” Blunt explains.
No matter which ESG segment companies concentrate on, setting a firm foundation for technology solutions is critical in terms of reaching goals. Reassessing and updating digital solutions is vital for companies to measure targets and provide timely ESG updates to stakeholders.
Saurabh Dubey, managing director at Deloitte Consulting, says it’s important to get started because this is a journey. Companies should think about the goals they care about and that will help them be successful—and how they’ll track results.
“The what is what they should be doing, and the how is how they enable it using a technology landscape,” Dubey says, “because what we're talking about is not a one-time transformational project you can do and be done with.”
A core set of ESG values applies to every company, he explains. The E focuses on environment, maybe conserving water or carbon neutrality. The S concerns social equity, inclusion, and diversity. The G, governance, is largely focused on cybersecurity—protecting privacy and information.
“Start by tracking those and automating how you track those so that you can then start focusing on things that are relevant to your business,” Dubey says. “You use your resources the right way by enabling the technology to take care of things that you already have.”
Some companies find tracking and achieving ESG goals challenging in the current macro environment. Leaders concerned with belt-tightening and budget stagnation or cuts may place ESG planning on the back burner. But investing in ESG strategies can help differentiate companies from their competition.
James Patten, managing director at KPMG, believes it’s the opportune time to focus on putting processes in place to execute ESG targets. Staying in front of value preservation and creation, brand reputation and, ultimately, customer loyalty is critical to creating a competitive edge.
Achieving ESG-related goals “is not going to happen overnight,” Patten says. “Prioritizing this now, even through uncertain economic times, versus pushing or delaying to later is going to help meet that stakeholder demand as well as set companies up for what we hope to be accelerated growth when the economy strengthens. So plant those seeds now to be able to accelerate when the economy does strengthen.”
Find out more in our ESG partner ebook. It includes perspectives from ServiceNow thought leaders Edua Dickerson and Maria Hart, and from our visionary partner ecosystem: Deloitte, Emission Box, Fujitsu, KPMG, RSM, and many more.
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