ESG is getting lost in translation
Cameron MacQuarrie, Head of Customer Transformation, ServiceNow
Let’s be honest: there’s a problem with ESG. It’s not the causes of the environment, social progress, or better governance that are the issue, however. The acronym itself has become tarnished, eliciting conference yawns at best, and active push-back at worst.
We know as leaders, we should — and in most cases do — care about these matters, but we’re collectively suffering a kind of ESG fatigue that makes it challenging to react positively to the phrase. This is partly because it’s too big to handle all at once, and partly because conversations around it still remain largely theoretical rather than practical — business leaders are taking all the right steps, without a clear way of tracking progress or success.
The thing is, ESG has a demonstrable positive impact on business, both financially and reputationally. Conversely, not acting on these issues puts organisations at a significant disadvantage that may well hamper future growth. We can’t let the term itself hide what is actually an imperative for your business. Call it whatever you like, but ESG requires action now.
Debunking the ESG myths
Read any recent report and it’ll show that today’s customers expect sustainable practices. At a time when one in four consumers admit having changed brands based on perceptions of a their ESG performance, taking tangible action is essential — especially as consumers in many industries already show distrust for brands who make hollow promises relating to ESG matters.
Cutting to the heart of ESG, therefore, requires focusing instead on what genuine, measurable actions can be taken. In getting to these actions, however, another common misconception often hampers progress: the idea that ESG is too big a topic to make any real headway without sinking a huge amount of budget into it — budget many organisations in today’s economic landscape simply don’t have. ServiceNow and ThoughtLab research shows this to be a common concern, with 38% of executives believing macroeconomic issues will make it difficult to achieve their ESG goals over the next few years.
This doesn’t have to be ‘Mission Impossible’, though it might seem that way. When faced with an issue on this scale, there are two choices. One: accept defeat and do nothing. Or two: chip away at it, splitting it into smaller, more manageable challenges.
The risk of doing nothing
Unsurprisingly, “just doing nothing” is not an option. Acting on ESG isn’t just a case of what’s right or wrong ethically, it’s also a business imperative. Failure to address ESG related matters in a tangible way has been shown to put organisations at a financial disadvantage, with research by Moore Global showing businesses committed to ESG saw a rise in profits by 9% over the past three years, and the repercussions stretching beyond just consumers, all the way to investors and stakeholders.
As leaders navigate economic turbulence, more businesses are turning to loans than ever, with approximately 757,000 companies in the UK now possessing debt — compared to just 305,000 before Covid. Businesses need financial backing to achieve growth and transformation aims in today’s landscape, but increasingly, that financial backing is tied to strict regulatory instruments like the EU Sustainable Finance regulations.
Taking all this into account, it’s clear organisations simply can’t afford to ignore ESG — regardless of how difficult a subject it may appear. So the only reasonable solution is to break it up into separate topics that can not only be handled by many different leaders within a business, but actually integrated into the solutions to other business critical issues.
A positive outlook for the future
Many of the issues in navigating a successful ESG strategy come down to siloed ways of working across multiple departments, the accessibility of data (or lack thereof), and the ease of reporting. The way these issues need to be dealt with is similar to how businesses are facing many other issues of today, from inflation to supply chain issues: it’s about streamlining collaboration and communication between many different areas of the business to provide a clear idea of what’s going on, and exactly who is responsible for it. Once unnecessary silos are ironed out, it becomes possible to boost visibility and start to think about implementing technology that can help.
When all is said and done, ESG doesn’t actually have to be its own gargantuan effort, or something to be handled in isolation from everything else. Putting the necessary tools in place to support a complete business resilience strategy can actually start to bring a measurable, impactful ESG strategy together naturally. It’s time to stop labouring under the weight of the phrase itself, and take small but impactful steps to realise ESG as what it really is: a force for business-wide benefit.