In recent years, aligning sustainability, compliance and risk management has become a key strategic move for improving ESG performance; here is why.
It increasingly sounds farfetched to separate the sustainable strategy of a given organization from compliance and risk management initiatives.
The idea that they’d be treated as three separate disciplines is beginning to fade and become outdated. As concerns about environmental, social and governance elements grow, a closer alignment could be the answer for a better ESG performance.
Sustainability, compliance and risk management
Companies have traditionally treated these three elements as separate disciplines, sustainability being the latest adherence to the mix of responsibilities businesses’ have.
On the one hand, risk management deals with the prediction and mitigation of possible company risks, while compliance focuses on legal aspects such as new or upcoming rules and regulations that need to be implemented.
But, on the other hand, sustainability inevitably includes compliance and risk management elements in its own nature, as it focuses on the long-term wellbeing of the company, especially regarding the environment and society.
Engage your employees in sustainability
The only feasible way to correctly and effectively manage these three elements and uncover a better ESG performance and rating, is by recognizing they are intertwined.
However, and although greater alignment between sustainability, compliance and risk management is necessary, there are still unique attributes that apply to each of them which make total consolidation dangerous, as they could end up overlapping priorities.
The need for effective alignment
The sustainable strategy of any organization is more dependent on risk management and compliance than ever before. Vague sustainable claims are no longer an option, instead, strong regulatory frameworks and long-term social and environmental strategies are the only way forward.
This increasing interest in the alignment of sustainability, compliance, and risk management comes a result of the strategic need for companies’ long term survival along with the wellbeing of stakeholders, society, the planet and even the economy.
Furthermore, it seems as though as companies begin to put more focus on sustainability and their ESG performance, these three elements naturally manifest more convergence.
A stronger corporate sustainability strategy carries more opportunities for compliance and risk management, expanding their focus and reach while simultaneously addressing important sustainability issues.
The benefits of alignment for corporate sustainability
Corporate sustainability can be greatly benefited by the alignment of these three elements; however, it is also safe to say that by putting the expertise and processes of each area into a collaboration strategy, everybody wins.
This is, the area of risk-management can, for example, be a guide about the costs of inaction, but compliance mechanisms can help understand how avoiding risks can not be the sole strategy, but rather actions need to me put in place and be followed through.
Such ideas together with a corporate sustainability strategy can result in a multi stakeholder materiality analysis that encourages action and risk reduction both for the benefit of the environment, society and the strengthening of the corporate sustainability strategy.
ESG issues will most likely continue to grow, forcing companies to be constantly looking ahead. It is the close collaboration of such three areas that can ease and speed such process up, achieving better ratings, investment opportunities and reputation.
Employee engagement and sustainability
In DoGood we believe that working collectively can help us find that which alone may seem unattainable or useless and instead create a collective and individual eagerness to make a difference, both for the sustainability and purpose of the company and a more sustainable way of being for all employees.
Through our technology we help companies establish ESG impact objectives for employees in regards to the sustainability strategy of the company, activating and tracking employees’ impact, and creating engagement that translates into improved ESG metrics, reputational value and an overall positive impact for the environment and society.