The era of ESG: from compliance, to truly making a difference

ESG is becoming a major concern for businesses across the world.

We’re moving from a world where these issues are a question of regulatory compliance, to one where we do it because it’s the right thing to do and it makes good business sense.

The problem is, the way we’re trying to keep on top of and manage such complex issues is very embryonic. Most senior executives are responsible for simply reporting on these issues. But an annual report that gets done once and is then simply filed away – and not actioned upon – isn’t enough.

It’s therefore essential we make ESG an everyday issue that we measure like other business-critical metrics. And we need to then make sure our words are met with actions, rather than lost in a status update somewhere.

It’s an exciting time, but it’s daunting, too. There’s much to do, and many aren’t quite sure how to do it.

But we have to get started. Here’s why.

Why we need to change

The first main reason?

Top talent doesn’t want to work for an organisation that isn’t passionately committed to having a demonstrable impact on the environment and its suppliers.

Deloitte’s Insights 2020 Global Marketing Trends Report, for example, found that purpose-driven companies had 40% higher levels of workforce retention than their competitors. This is particularly true amongst younger generations: millennials will make up 75% of the global workforce by 2025 and are looking for socially responsible employers; the trend among Gen-Z is even stronger.

Secondly, customers, too, are becoming more and more demanding about who they choose to work with. I can give you an example here: I remember having a really good meeting with a luxury fashion brand in a previous role. But while the team we pitched to was incredibly diverse, ours was not. We were told, in no uncertain terms, that we were unlikely to win this kind of pitch if we didn’t build a more diverse team.

It was an eye-opening experience, and one we were keen not to repeat. Those moments can be difficult – but we all need them. They show us the real importance of change. And we have to act on them.

So, what do we need to do?

How to do it

1.      Focus on small actions as well as big

First and foremost, part of shifting the trend is just to start doing something. We can’t do everything alone – but there’s a lot we can do. Even the smallest gestures can make a difference.

Think about all the free merch companies hand out at events, and all the free food that gets wasted. What if we didn’t do this? What if we spent that money on planting trees or investing in sustainable food sources instead?

Small steps can go a long way to boosting diversity and inclusion, too. For example, if every exec at every senior company could visit one school and make their business relevant, exciting, and welcoming to the students they found there, we’d make huge progress in attracting and retaining different types of talent.

2.      Don’t let the desire for perfection hold you back

This leads me to my second point.

I know many of my colleagues in senior leadership positions are often held back from taking steps on ESG – even small steps – because they worry they won’t do it perfectly, the potential gains won’t be fully realised, or someone else will ‘do it better’.

The thing is, we will never achieve anything if we aim for perfection. No company is perfect in this regard. We all have a lot to do. And we won’t get where we want to be for the considerable future.

But if we start with small steps now, we’re at least getting our feet in the stirrups and laying the groundwork for bigger, better initiatives further down the line.

3.      Collaborate

Finally, to make those initiatives a success, we need to collaborate.

There’s nothing wrong with a bit of healthy competition. But social and environmental issues shouldn’t be on the table. We need to compete on the basis of our products. 

Why? Because when it comes to social initiatives, we all have the same goals in common – leaders, customers, partners, employees, and everyone else. And we can only achieve those goals if we work together.

 And, a word to the wise – customers and consumers are unlikely to look kindly on businesses who are busy using social issues to scrap over market share when our planet is at risk.

 At the end of the day, no one has the right answers here. If we did, we’d have already put them in place – and today’s social and environmental issues wouldn’t exist.

 But not knowing the answer is not an excuse to not do anything. It’s imperative we start making changes now, because we’re running out of time. And businesses that aren’t able to attract the right talent for the future – or make clear strides to improve their environmental impact – are going to suffer in the years ahead.