Think back two years, and you probably wouldn’t have predicted anything like all that’s happened since 2019.
The pandemic has completely changed the way we view the world, the way we think, and the way we conduct our lives.
And for companies, it’s meant a whole lot of reflection, from rethinking business models to considering new ways to deliver services. Just trying to keep afloat in these very testing times has required a great deal of resilience.
But it’s not just business operations that have been affected, it’s companies’ social responsibilities, too. While many companies talk a good talk about social purpose, values, and caring for stakeholders, the past few years have required action, not words—whether it’s in response to health and economic consequences from COVID-19, the environmental impact of climate change, or the social fallout of systemic racism and inequality.
It’s clear that the role of business in society is changing, and while many companies are doing their best, many others still have a way to go to build a sustainable, socially beneficial business ecosystem. In fact, according to new research from ESI ThoughtLah and ServiceNow, 56% of organizations that rank as resilience leaders cite assessing and managing ESG risks as a priority during the next one to two years.
Businesses that want to better prepare for the future must shift their view toward an adaptable, long-term approach to resilience with ESG at the heart. The alternative—failing to adapt to these new requirements—will see existing talent leave, businesses devalued, and customers choosing to take their business elsewhere.
ESG is vital to business transformation
The demands of shareholders have changed. Gone are the days when businesses only had to worry about handing over dividends.
Beyond shareholders, the entire workforce now judges companies on their actions, policies, and responses—not just where internal company protocol is concerned, but societal norms, natural ecosystems, and the policy environment, too. On top of that, ever more discerning customers are investigating companies they buy from with a fine-tooth comb.
When you think about it, it makes sense. While we might often put people into useful manageable silos—such as supplier, buyer, customer, shareholder—it can make us forget that they’re all people, with very different identities and concerns in their personal lives. It’s only natural that these concerns extend to their professional world, too.
So in a world where who you are matters as much—if not more—than what you do, companies need to stop thinking of stakeholder interests as just an add-on. They’re now essential to innovation and business transformation.
Because at the end of the day, businesses that fail to account for the varied interests of diverse stakeholders within their ecosystem—from workers to suppliers, local communities, governments, and environmental advocates—will simply lose out on talent, leadership, and customers. They’ll simply go elsewhere. And that’s business resilience out the window.
ESG is no longer just ‘good deeds’—it must be authentic
It’s worth noting, however, that there’s a difference between doing something and making a difference. A hollow response to these issues is not enough: ESG is now more than just doing good.
Businesses need to really consider what being truly ethical really means, and extending ethical practices throughout their supply chains. Unfortunately, your word is not enough here. Many companies have been caught out in a ‘gotcha’ moment, where boardroom claims about sustainability or diversity were directly contradicted by facts on the ground.
What’s more, businesses are increasingly asking for proof of ESG metrics in their RFPs and throughout the pitching process. They might want to know your green score, measures of equality in your hiring processes, or even sustainability in your supply chain.
That means it’s in your interest to invest in a technology that can give you those metrics and keep you on track. Workflow technology, for example, can help you stay on top of your supply chain, streamline safety audits, identify climate-related risks, and act on any issues that come to light immediately.
I say a technology, singular, not technologies, for a reason. Using a single platform on which to manage and measure business processes gives you one single source of truth. With an accurate representation of how your business is performing, how you’re managing the needs of your employees, and so on, it ensures that your processes are objective, your waters are unmuddied, and allows you to make fair comparisons on a level playing field. And that should mean you avoid that dreaded ‘gotcha’ moment.
The ROI of ESG
So, to sum up, why is it worth doing all of this?
The ROI on ESG activities almost speaks for itself. A healthier, more sustainable planet, a fairer working environment with more productive employees, and an enhanced business reputation.
And if that’s not enough, the benefits of good ESG policies are felt not just within your business, but are passed down the supply chain, too, to help provide a better workplace—and world—for everyone.
At the end of the day, people buy from those they like and respect. If you can make your business trustworthy and authentic, all while having a positive impact on the world around you, you’ll not only succeed now, you’ll be resilient for the future, too.